Is The U.S. In Another Housing Bubble?

The U.S. housing market has been an unlikely beneficiary from the Covid-19 pandemic.

During the pandemic, home prices have climbed at a record pace. The median price for an existing home reached over $363,000 in June 2021, a 23.4% year-over-year increase.

“You can see in just basically the last 15 months or so, we’ve seen a dramatic acceleration in home price growth to levels we haven’t seen in decades,” CoreLogic chief economist Frank Nothaft said.

However, according to most experts, the market is shaping up to look more like a boom rather than a bubble.

“We say bubble because we can’t believe how much prices have gone up,” CNBC real estate correspondent Diana Olick said. “A bubble tends to be something that’s inflated that could burst at any minute and change and that’s not really the case here.”

While speculation certainly is a factor, the main cause for the current housing demand is low mortgage rates. At the start of the pandemic in March 2020, the 30-year fixed-rate mortgage rate sat at 3.45%. By July of this year, that number had dropped to 2.87%.

Supply is also an issue. According to the National Association of Realtors, the U.S. has underbuilt its housing needs by at least 5.5 million units over the past 20 years. That’s a stark comparison to the previous housing bubble in 2008 when overbuilding was the issue.

“So we’ve got a boost in demand that’s due to record low mortgage rates and we’ve got a shrinkage of supply,” Nothaft said. “So between more demand and less supply, prices are up and they’re up at the fastest pace since the 1970s.”

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Is The U.S. In Another Housing Bubble?


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39 Responses

  1. Sean Bruce says:

    "People buying a house putting little money into it and flipping it for enormous returns would be a sign of a unhealthy market"…… hello thats been going over for over a year now.

  2. Preston Hanson says:

    Yes it is in a bubble. It's the only way for most people to get ahead other then ripp off labor. America will always be in a bubble as long as thays the case. Same with China

  3. ed Zudzyn says:

    I hope this time it sinks this Country!! Stupid Government!!!

  4. agreedboarart says:

    Middle class problems. Can't relate.

  5. Rampant Appraisal Fraud says:

    San Luis Obispo, CA Housing Prices Crater 12% YOY As Central Coast California Borrowers Default

  6. David King says:

    Long term holding is good as long as your income is long term also. Life is a gamble, if you are betting on inflation, buy now, if you are betting on recession, hold off till then. It takes discipline to hold when you see Bitcoin or housing continue to rise. It is a new world and nothing happens exactly the same twice.

  7. David King says:

    These experts are giving poor advice and reasons for a stable market. In a recession, jobs go away and so does the ability to pay. When you can't pay there is a chance that your neighbor can't pay either and then goes your equity. Prepare for the worst case scenario and hope that it only gets that bad.

  8. David King says:

    Catistrofic economic events, such as a pandemic, are now cushioned by massive printing by the Fed. The housing market did not benefit from the pandemic, but from massive printing by the Fed. The question is, when will the Fed stop printing and fueling high inflation?

  9. David King says:

    Every home buyer is a speculator in his own way. I value property by cost of construction and return on investment. I look for a 1% per month gross return.

  10. David King says:

    It is interesting to see these millennials predicting the future of the market.

  11. Dūm Dūm Brown says:

    …perhaps the USA could learn from Canada and Australia where the supply is actively throttled by the government — that way you get an infinite bubble woooo hooooo!

  12. T U says:

    Raise as much cash as possible people. Deflation is coming and cash will be king!

  13. Jerry H. says:

    Am I the only one hoping for it to crash so i can buy a house in cash again?

  14. D H says:

    Rates will rise once again, prices will fall. How much is dependant on how fast and high rates increase

  15. Ashlyn Eagle says:

    Oh, there's documentation? Credit checks? Employment? Assets? Well, we all know who isn't buying in this "boom".

  16. Dave Anderson says:

    Yes, but not for long! The housing bubble is soon going to bust!

  17. Rampant Appraisal Fraud says:

    Waitsburg, WA Housing Prices Crater 28% As Fraud-Riddled Pasco-Kennewick Housing Market Buckles

  18. Reakted says:

    With a 40% inflation within just 1 year, is it really surprising that home owners dont want to sell their home for cheap??? Its too low and not even inflation adjusted lmao. Blame the ones printing the $.

  19. Daniel Buezo says:

    The bubble will pop once I buy my house. That’s how it usually works for me. Until then you are all safe.

  20. Joshua Fausset says:

    The only thing they got right in this was the driver for this bubble is low rates. Investor loan demand has been completely distorted by Fed intervention.

  21. Marvin Scott says:

    “The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliche, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short.”

  22. Mike Mike says:

    I knew people that bought houses and their graves sites at the same time! Wtf!

  23. Tony D says:

    Lets go Brandon

  24. Tony D says:

    I refuse to buy a house for 300k thats worth 150k

  25. Wyane Cliff says:

    Asset that can make you rich
    Real estate

  26. Vincent Zincone says:

    "Those that ignore history are doomed to repeat it"!

  27. OneHorseTown says:

    The entire country is a bubble. China was able to easily manipulate the greedy like children with candy.

  28. MkII says:

    Low mortgage rates and not enough houses? What a joke! NBC is owned by Wall Street.

  29. Stafon Von Camron says:

    Who the hell has all cash to buy up homes? Has to be rich people.

  30. Rampant Appraisal Fraud says:

    Redmond, WA Housing Prices Crater 19% YOY As Double Digit Price Declines Blanket Washington

  31. jefferson county says:

    Expt Sophia is legit and her trade is awesome I keep on earning every single week.

  32. John Chen says:

    When Fed stops buying MBS and the foreclosure ban expired in 2022, that is when the schit hits the fan, and cash is the king. Just like that old vulture perching on the tree :

  33. William Smith says:

    So they've listed all the general requirements of a bubble but don't want to call it a bubble

  34. 5.0 king says:

    It’s simple once they raise rates it’ll go away. Or inflation. Inflation rises and we make the same money do you think if inflation keeps going at the rate it’s going people will be able to afford the mortgage

  35. Kym 1 says:

    Would the market crashalready

  36. Chris S says:

    Interest rates need to go up for demand to slow. Cheap money brings in speculative buying.

  37. Rampant Appraisal Fraud says:

    With 25 million excess, empty and defaulted houses out there, of course prices are falling.

    Sacramento, CA Housing Prices Crater 22% As California’s Fraud Riddled Housing Market Implodes

  38. nymbus 43 says:

    I doubt the bubble will pop in our life time with housing shortage being so bad and continously getting worse each year. Can't find reasonable rent, can't or won't pay for such an unreasonably priced house. Even with an income based mortgage payment it would still be hard to have a decent life.

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