Housing News

Are we about to have another housing bubble?

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After the housing market completely crashed, many of us remain braced for the next shoe to fall, but should we be freaked out or relaxed? Let’s look at the data.

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Another housing bubble?

When you own a home or are considering owning a home, when you’ve read headlines for half a decade that the market has been decimated, you may be braced for another catastrophe, despite improving numbers. On all accounts, housing is on the rebound – sales are up, prices are up, building permits and starts are up, and confidence is also up.

But should we all be in the fetal position waiting for the next round of the sky falling?

Trulia doesn’t think so. In fact, their Chief Economist, Dr. Jed Kolko says that American housing is actually 3.0 percent undervalued, which means that in conjunction with a variety of other factors, the housing sector isn’t so hot that it’s a bubble – if homes were selling for well over their worth, we’d have a worry, but Dr. Kolko says we’re evening out and are not on the verge of another housing bubble.

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The other good news from Trulia is that builders are not overbuilding, meaning there won’t be another glut of inventory that just sits there, dragging down the market. Further, lenders are not over-lending, meaning that the era of no-doc loans (aka “liar loans” wherein lenders took people at their word that they made X dollars) is officially over.

The National Association of Realtors continues to assert that lending remains too tight, and that may be true, but the difficulty for some people to get approved is another reason to feel safe that we’re not on the verge of another bubble, despite rising prices.

Doesn’t that mean prices will catch up?

If you’re home shopping, prices are rising, and while Trulia reports that price increases are not accelerating (a good sign, meaning no bubble), they are still slowly ticking up.

So with this three percent undervalued market, will prices catch up? Sure. Slowly, but surely. If you’re on the fence about buying, if you’re concerned about pricing, sooner is probably better for your wallet than better.

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