We live in an age where success in real estate is always tempered by caution. Fear of the next housing bubble is palpable. That’s an enduring legacy of the last housing crisis, and it may stay that way for some time. What this cautious optimism doesn’t give us is a real picture of the health of different housing markets.
A recent article in HousingWire pondered: “Housing in the state of Texas was hotter in 2016 that it’s ever been before, but is real estate in the Lone Star state getting too hot?” The author then goes on to note that home prices in multiple markets – Dallas, Las Vegas, Phoenix, Portland, Atlanta, Los Angeles, Miami, San Francisco, and Tampa – are rising too quickly and are exceeding the supporting economic fundamentals.
But here’s the thing: overpriced homes aren’t the hallmark sign of a housing bubble. The definition of a bubble is when people drive up prices simply because they expect the price will continue rising indefinitely. With that logic, no price is too high.
But here, in our reality of 2017, supply and demand are the driving forces at work, and that’s economics 101. Plus, debt is still well below the peak of the 2006 bubble. What economists do expect is a rebalancing of the market. Home prices will slow their gains in some areas, while values will decline slightly in others. Statistically, we are due for a recession. But not for a great recession.
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