The question of whether the real estate market is a bubble
ready to pop seems to be dominating a lot of conversations – and everyone has
an opinion. Yet, when it comes down to it, the opinions that carry the most
weight are the ones based on experience and expertise.
Here are four expert opinions from professionals and
organizations that have devoted their careers to giving great advice to the
housing industry.
The Joint Center for Housing Studies in their The State
of the Nation’s Housing 2021 report:
“… conditions today are quite different than in the early
2000s, particularly in terms of credit availability. The current climb in house
prices instead reflects strong demand amid tight supply, helped along by
record-low interest rates.”
Nathaniel Karp, Chief U.S. Economist at BBVA:
“The housing market is in line with fundamentals as
interest rates are attractive and incomes are high due to fiscal stimulus,
making debt servicing relatively affordable and allowing buyers to qualify for
larger mortgages. Underwriting standards are still strong, so there is little
risk of a bubble developing.”
Bill McBride of Calculated Risk:
“It’s not clear at all to me that things are going to
slow down significantly in the near future. In 2005, I had a strong sense that
the hot market would turn and that, when it turned, things would get very ugly.
Today, I don’t have that sense at all, because all of the fundamentals are
there. Demand will be high for a while, because Millennials need houses. Prices
will keep rising for a while, because inventory is so low.”
Mark Fleming, Chief Economist at First American:
“Looking back at the bubble years, house prices exceeded
house-buying power in 2006 nationally, but today house-buying power is nearly
twice as high as the median sale price nationally…
undervalued in most markets and the gap between house-buying power and sale
prices indicates there’s room for further house price growth in the months to
come.”
Bottom Line
All four strongly believe that we’re not in a bubble and
won’t see crashing home values as we did in 2008. And they’re not alone –
Goldman Sachs, JP Morgan, Morgan Stanley, and Merrill Lynch share the same
opinion.
Source: Real Estate with Keeping Current Matters