2021 Housing Bubble: Fact or Fiction?

Here are three reasons why we’re not in a bubble like we were in 2006.

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I’ve been in the real estate business for 20 years now; I went through the 2006 explosion and then the aftermath of the 2008 crisis where we saw prices fall by 50% to 70%. Here are my top three reasons why I don’t think that we are currently in the same kind of bubble:

1. People are moving for a reason. Many people are moving away from urban areas to more rural areas and suburbs. Not only that, a lot of people are moving to other states; the advent of working from home has enabled people to move without having to worry about employment.

2. People aren’t buying homes to flip them. In 2006, people were buying anywhere from five to 10 properties to flip and resell on the market. In today’s market, that kind of activity just isn’t viable.

      When markets escalate as they have been lately, they tend to even out eventually.

3. Loan requirements aren’t the same. Back in 2005 and 2006, you could get a loan with no money down, no documentation, and with a pretty low credit score. There were even cases where deceased people were getting mortgages! These days, lending requirements have gotten much tighter. You need to submit a wide range of documents and be in a strong financial position to get a home loan in today’s market. Cash and conventional loans are driving the market right now; higher-risk loans are getting kicked out of the market.

All that said, you never know what will happen in the future. When markets escalate as they have been lately, they tend to even out eventually. It’ll take a while for inventory to reach a point where we’re even close to a buyer’s market. Here in St. Lucie and parts of Palm Beach County, we have around 1.5 months of inventory (a seller’s market is anything less than three months).

If you have any questions about the market or your position in it, please feel free to reach out to me. I’d be happy to have a conversation with you.

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