The housing market appears unstoppable as real estate prices soar. In just a short year, the market value of the average home has jumped 19.1%. Even as mortgage rates are creeping up, it doesn’t appear that homebuyers are backing down from purchasing real estate.
Though the market seems to steadily climb upwards, many are left wondering: are we entering a housing bubble? Is it possible that the market will crash in the foreseeable future? Many experts were interviewed on this topic and though all agreed that homebuyers are unlikely to back down from their purchases, there are signs that the housing market will falter at some point due to our current political climate and inflation.
It seems that the fear of missing out on a property is what’s driving homebuyers to take a leap of faith. As many flock to purchase homes, this drives the price increase on the market, regardless of actual home values. Another difference we’re seeing today between what happened in the early 2000s is that many people are actually able to afford these homes rather than pushing the boundaries of their budgets. In fact, much of the market is driven by demand from the Millennial generation. As such, it is unlikely that the market will take a major hit anytime soon. It is projected that the market won’t have enough inventory to supply the number of homes in demand.
After the 2008 real estate market crash, lenders have tightened up their lending guidelines. This makes qualification for a mortgage harder and only available to those with enough funding to pay off their debt. Because of this, the market is not likely to have any projected problems. However, that doesn’t mean in the next five years real estate won’t necessarily see a slight decrease in pricing or interest.
There are certain warning signs that are pointing towards our country heading towards another recession at some point. As inflation started climbing without breaks, for experts, this has become a troubling sign when making their predictions. In fact, just May of this year saw the biggest price hike in 22 years! Though this won’t necessarily impact long-term mortgage loans, it could impact short-term lending and credit card debt.
Modern homebuyers are faced with the tough choice of taking the leap and purchasing a property at a higher price, or hoping that the market will become stagnant at some point. However, one thing’s for certain, and that’s the demand for properties will continue to remain high and new constructions are not going to have the ability to meet these demands.