![]() ![]() Gary Shilling has many, many charts and numbers validating that sentiment. None of this is rooted in the kind of risky borrowing that inflated the housing bubble. Americans think this is the worst time ever to buy a house, according to a recent poll. ![]() This money, combined with favourable lending conditions, inflated prices to a point where they became unsustainable and the bubble burst. More than six million existing homes sold in 2021, the highest number since 2006. and Rays-Wahba, G., The Housing Boom and the Decline in Mortgage Rates, Liberty Street Economics, Federal Reserve Bank of New York, 7 September 2021 and Igan. There was a major housing market bubble in the 2000s which stemmed from an influx of fresh cash into the housing market. August 17, 20216:30 AM ET Greg Rosalsky Enlarge this image Pixabay Even before the pandemic pushed the U.S. Once those who are speculating on continued price rises start to believe that the increase may not continue, it can spark a selling spiral that sees the price collapse. In fact, it probably is as I sit here revising this post in 2023. So is this just a temporary consequence of poor economic trends or a long-term adjustment to a housing market bubble? Is there a real estate bubble?Ī ‘bubble’ is a term used to describe a market that has seen a run-up in prices, fuelled by demand and speculation, to an unsustainable level. Therefore, 2021 could be the peak in the current housing boom. Although the price of homes sold has continued to rise, the frequency of those sales has fallen dramatically.Ī report from the National Association of Realtors found that sales of existing homes were down 28.4% in October from a year ago, and down 5.9% from September. ![]() However now that interest rates have risen significantly, the price of mortgages has shot up too and buyers are becoming a lot less motivated. ![]()
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