It makes sense that people worry we’re in a housing bubble. After all, it wasn’t that long ago that the market crashed and sent home values tumbling. But the recent spike in home prices has little in common with what was happening before the crash in 2008. Experts agree. A recent survey of economists found that the vast majority of them say what’s happening in today’s market is not a bubble. Why? Fundamentals. The home price increases we’ve experienced over the past few years are the result of an imbalance of supply and demand. Put simply, there are a lot of Americans interested in buying a home at the same time that the supply of homes available for sale is much lower than normal. In fact, the number of available listings is about 50 percent lower than it was just two years ago. When that happens, buyers have to compete for the homes that are on the market, which leads to bidding wars and higher prices. In other words, demographics and low inventory are the primary reason prices have been rising, and those aren’t factors that are likely to change anytime soon. (source)
