Are We In A Housing Bubble?
I'm frequently asked if we're in a housing bubble. Watch the video to find out what I think or read my thoughts below the video.
Are we in a housing bubble? This is a popular question so I’ll take my stab at it. I will say that people on both sides are very passionate about their answer. As for me, well, frankly, I don’t have a clue. Prices have increased rapidly for housing in the Austin area, which qualifies as the first part of a bubble – the run up in prices. The question is will prices quickly fall. Well, they are already falling, but I couldn’t find any agreement on how far prices need to drop to be called a bubble. I can safely claim that this will not be a repeat of 2008. Why? Homeowners have a lot of equity in their homes and did even before prices ran up. Second, the job market is strong. Third, loans that have been made on homes over the past 10 years are fundamentally sound. Sure, we do see a few foreclosures, but the days of giving anyone a loan ended during the Great Recession. Fourth, the Austin area economy is running on all cylinders. Unless a lot of companies start announcing layoffs of hundreds or thousands of employees, I don’t see that changing real soon. So was the local real estate market overheated? Absolutely. I don’t think anyone is going to argue that. But there’s a big difference between prices pulling back and a bubble popping. My gut tells me it isn’t a bubble popping, but I didn’t predict the big runup in prices, so I’m certainly not a soothsayer about the market. Prices are already coming down. We’ll just have to wait to see how low they go. I’m Craig Smyser with 1835 Realty.