“Are we in a housing bubble?” is a question I get asked all the time. Buyers and sellers who are watching home prices soar want to know if the 2020-2021 housing market is going to have the same fate as the 2008 housing crisis.
While I don’t have a crystal ball, I’d like to offer some valuable insight as a homeowner myself and a realtor with many years of experience.
Rather than ask, “Are we in a housing bubble?” I think what people really want to know, “Is this housing frenzy going to have the same effect as the 2008 housing crisis?”
Remembering the 2008 Housing Crisis
It’s tough to believe, but 13 years ago, many homeowners lost their homes to foreclosure, causing the 2008 housing crisis. Banks lent money and plenty of it without checking on income, job security, or assets.
Housing prices increased and then plummeted, causing many to owe more than their homes were worth. Supply overshadowed demand and the market was flooded with homes few people wanted to purchase. (source)
Why the Current Real Estate Market is Different than the 2008 Housing Market
There are several factors that differ between the 2008 Housing Market and the one we are living in today.
Banks are no longer funding bad loans; rather, loan applicants must show proof of income and assets to get a loan and one they can afford.
Two, lower interest rates and a change in the percentage of disposable income considered for a loan equate to homeowners having more money in their pockets to pay their mortgage in case real estate prices drop. (source)
Three, there are more of us who need homes. Forbes states, “The U.S. population has increased by approximately 25 million, and the median age has increased from 36 to 38 meaning there are more of us and more of us are old enough to have jobs.” Millennials are the new home buyers and fill the demand that lacked in 2008.
Furthermore, building has slowed compared to the rate of homes being built in 2008. An increase in buyers, and a decrease in homes being built mean the demand for homes will dictate the prices that are being offered-even if the prices are hundreds of thousands of dollars over asking price.
The Gamache Team has seen buyers offer amounts well over asking price in the sale of our Livermore, Pleasanton, and Dublin homes.
Predictions for the Current Real Estate Market Frenzy
Based on our research and experience, the current real estate market frenzy is not going to cause the same type of collapse in the housing market that we saw in 2008.
Buyers and sellers active in the Livermore, Dublin, and Pleasanton real estate markets will continue to see value in their homes, with prices predicted to remain on the upswing.
California continues to be a hot market, according to reputable sources such as the National Association of Realtors and The New York Times. Homes in the million dollar and above range continue to get multiple offers, some above asking price, but with fewer offers as buyers tire of bidding wars.
Consult with The Gamache Team for your Real Estate Needs
If you are nervous, anxious, or excited about the real estate market and want more information that relate to your real estate needs, contact The Gamache Team.
We know real estate and have a half-century of experience to learn from.
We aren’t your average real estate agency, and we’d be honored to work with you.