Historically a housing bubble was created when homes are readily available due to a surplus supply, credit is loose, and high demand for housing exists.
Banking regulations became more restrictive after the 2008 market crash, so credit is not loose. Buyers today are better qualified to purchase homes and sustain them. Home prices may come down some, but the demand for homes far exceeds the supply of homes available.
Will the housing market stay hot?
Yes, but it may cool a little. Higher mortgage rates and the high price of homes may slow the rapid increase in home prices, but it will not stop it. The demand for housing is still strong, and the supply is just not keeping up with the order.
Current supply and demand
The pandemic created a unique real estate situation over the past couple of years. Buyer demand was scorching, bidding wars were common, and inspections were waived. In addition, many some owners are staying put due to economic concerns. They fear trying to find a new place. Some are selling now to cash in on the high prices they can get now.
While many experts agree that the circumstances that led to an overheated housing market have changed somewhat, the underlying conditions remain the same. Demand for homes is higher than the supply of homes.
Image by Gerd Altmann from Pixabay
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