What does a housing bubble mean?A housing bubble is a period marked by an unusual spike in housing prices fueled by high demand and low supply, speculation by investors and exuberant spending.
What Is A Housing Bubble
Dated: May 24 2022
What does a housing bubble mean?
A housing bubble is a period marked by an unusual spike in housing prices fueled by high demand and low supply, speculation by investors and exuberant spending. Bubbles are caused by a variety of factors, including rising economic prosperity, low interest rates, more mortgage product offerings and easy to access credit. Experts say builders have not been building enough homes. An analysis by housing giant Freddie Mac suggests that the housing shortage has increased 52% from 2.5 million in 2018 to 3.8 million in 2020. The bubble bursts when demand decreases dut to lack of capital or higher interest rates, or inflation eating into incomes and savings – while at the same time supply realigns with demand (when construction catches up). That can result in a sharp drop in prices, popping the bubble.In the past month, mortgage rates have been rising in the face of rapidly rising inflation as well as the prospect of strong demand for goods and supply disruptions.The 30-year fixed-rate mortgage topped 4% on March 17 for the first time since May 2019, according to Freddie Mac. And it probably will rise further; the Fed is projecting six more rate increases this year. The 30-year fixed-rate mortgage averaged 4.67% for the week ending March 31. A year earlier, the 30-year rate averaged 3.1%.
Buyers have been paying higher than asking price and as the bubble screeches tighter that may not be a great idea. Sellers should also stop procrastinating and get their homes on the market now!. He who hesitates is lost was very true in 2007 and may be just as true in 2022 second half.