Are we in a housing bubble?
Housing bubble coming? It is probably one of the biggest questions in everyone’s mind for quite some time. Are we in one? Will the bubble pop? When? Time will tell.
California has set new records for home prices. Housing prices have had double digit increases in many areas of the state over the past 2 years. The median home price is hovering around $780,000. Is another housing bubble coming that will pop like it did back in 2008?
Home price growth has certainly accelerated over the past couple of years and home sales have taken a tremendous toll on housing inventory. Current home prices increases can be explained by 3 factors:
- falling interest rates
- income growth.
California Home Price History
Cost of California Homes
Housing Bubble Summary
Lack of inventory and strong buyer demand point to continued appreciation/home price growth for the foreseeable future. Based on the law of supply and demand, it does not look like the housing bubble will pop any time soon. Homebuyers should always purchase homes with their eyes wide open about both the potential risks of short-run market fluctuations and the long-term benefits of homeownership.
It isn’t 2008 all over again, just make sure the deal makes sense for your own personal economy.