The Housing Bubble

Ask anyone (buyer, seller, or random person on the street) their opinion on the current housing market and I’m willing to bet that 9 out of 10 of them make some sort of comment about being in a housing bubble. And who wouldn’t? In 2022, we’re honestly not that far removed from the last time a housing bubble burst in 2007. We all remember and some of us still feel the sting. With record setting and rapidly rising house prices, it’s no wonder everyone just assumes we’re in another bubble. Are we? 

Cnn.com recently interviewed Daryl Fairweather, chief economist for real estate technology giant Redfin. Fairweather was able to give his professional opinion on whether the current housing market exists in a bubble or not. 

“It is hard to imagine prices going down,” she said. “But I think we are nearing the end of the period where homes are going for $100,000 over asking price.” According to Fairweather, the actions taken in today’s housing market are vastly different from what was practiced in the early 2000s. 

Back then, buyers were granted mortgages they couldn’t actually afford. Lender rules are more strict, mortgage rates are fixed, and (after the last crash) new lending laws were put in place to protect consumers. 

“I don’t think the risk is like what we saw from 2008 to 2010 or that prices are going to collapse,” said Mayer. “But it is perfectly reasonable that they could go up in the next year, and then go down. I could see prices being 5% to 10% lower three to five years from now. And you could end up selling for a little less than you bought it for.”

For now, buyers should lower expectations and find the home that meets most of their demands, instead of expecting every box to be checked.