Are We In a Housing Bubble?
By Jen Paratore, Realtor
So, are we in a housing bubble? In short, no. Stricter lending practices over the past few years have ensured more qualified buyers and stronger underwriting on mortgages. A decade of stable housing market conditions has also allowed homeowners to build up more equity, ensuring less people are underwater on their mortgage. We are also not seeing a high number of foreclosed homes hit the market all at once as a result of the pandemic. The pandemic mortgage forbearance programs have allowed some homeowners to postpone mortgage payments without penalties to help them get back on track. Foreclosures over the next few years will unfortunately increase but the number should be significantly less than the housing crisis of 2007.
The predictions for the rest of 2021 market are optimistic. Home prices should continue to rise this year with demand remaining strong. However, as the mortgage rates continue to rise and more buyers take a seat on the sidelines, the market should naturally balance itself out to a variation of seasonal supply and demand that we are used to seeing. As the market corrects itself, home prices may eventually experience a dip but nothing like the crash we saw 15 years ago.
Jen owns Cordaville Realty in Ashland
[email protected]
617-74-7079
The 2021 real estate market has been red hot. Low interest rates coupled with a historically low number of homes for sale has created an ultra-competitive seller’s market. Homes are receiving multiple offers, oftentimes selling significantly over asking-price with buyers waiving contingencies to ensure their offer comes out on top. This fevered market seems unsustainable in the long run and has many people wondering if the housing market is ready to burst.
So, are we in a housing bubble? In short, no. Stricter lending practices over the past few years have ensured more qualified buyers and stronger underwriting on mortgages. A decade of stable housing market conditions has also allowed homeowners to build up more equity, ensuring less people are underwater on their mortgage. We are also not seeing a high number of foreclosed homes hit the market all at once as a result of the pandemic. The pandemic mortgage forbearance programs have allowed some homeowners to postpone mortgage payments without penalties to help them get back on track. Foreclosures over the next few years will unfortunately increase but the number should be significantly less than the housing crisis of 2007.
The predictions for the rest of 2021 market are optimistic. Home prices should continue to rise this year with demand remaining strong. However, as the mortgage rates continue to rise and more buyers take a seat on the sidelines, the market should naturally balance itself out to a variation of seasonal supply and demand that we are used to seeing. As the market corrects itself, home prices may eventually experience a dip but nothing like the crash we saw 15 years ago.
Jen owns Cordaville Realty in Ashland
[email protected]
617-74-7079
