Another Housing Bubble? Not Likely!

The Housing Market is Slow and Steady

Always quick to find a story, many American headlines are suggesting the threat of another housing bubble. But should we really be panicking?

According to the level-headed experts at Seeking Alpha, we’re far from experiencing another housing bubble. In fact, rather than panic, we should keep our composure and be optimistically hopeful.

Housing bubbles accumulate when home prices make rapid and drastic climbs, instead of a slow and steady rise that matches normal inflation rates and average incomes. From there, it’s simple supply and demand. When home prices get too high, nobody wants to buy. And, when that happens, the prices drop and the bubble pops.

There are a number of signs to prove that today’s housing prices are not necessarily suggestive of a housing bubble, and that prices are rising at a much healthier rate this time. Specifically, January numbers show that brand new single-family home sales are still 200% below their peak during the 2007-2011 housing bubble. That’s an enormous difference, making a good argument that there’s no cause for alarm. And existing single-family home sales are still nearly 60% below their peak numbers during the bubble. Point being, the rise in home sales and prices is at a stable and cautious climb, which is healthy.

While some areas of the country, like Phoenix and Las Vegas, are experiencing a quicker rise in home prices, they are the exception this time, rather than the rule. Having said all that, we can certainly understand the nation’s fear of another housing bubble. Nobody wants a repeat of the last 10 years! Headlines hinting that we’re headed towards another housing crash are far from helpful though, and homeowners and potential buyers should stay level-headed in this midst of this inconsistent news. Much of the last housing bubble was a result of a lack of education on everybody’s part. So, before you make any rash decisions, do your due diligence and consult a few professionals.

For homeowners in the St. Louis area, a housing bubble is highly unlikely. If you’re looking to sell your home in Missouri, your best bet is to seek guidance from a local listing agent. They’ll be able to give you a rational picture of the housing market in your neighborhood, and help you to get the best and most realistic price possible, without crashing the local economy!