There is no question that the housing market 🏠 is on fire at the moment. We have favorable interest rates and a high demand coupled with low inventory, so naturally, there will be concerns about a housing bubble. At Ironwood Homes, we do not believe this to be the case. Unlike in 2006, the market is not inflated. This market is based on loans that people can afford, not unstable subprime ones. We think current housing prices are based on high demand 📈 and limited supply.
This is our professional opinion. Ethan Wolf-Mann, the Senior Writer for Yahoo Finance, echoes our thoughts: “High demand for housing combined with low inventory has heated up the market – boosting property values and leading some to wonder if we’re in bubble territory.” And that is the question on everyone’s mind. It affects how we buy homes and how we evaluate risk. Are we headed for another 2006?
People tend to get nervous when we start using words like a housing bubble and an inflated market. They have good reason to be. Most homeowners sigh and are frustrated when they think about what started to happen in 2006. Writing for Yahoo Finance, Morgan Stanley strategist Vishwanath Tirupattur states, “even uttering “2006” carries a lot of baggage when it comes to housing, as that was the trigger that imploded the economy 15 years ago.” Tirupattur goes on to say that this is not a bubble, nor is it like 2006.
The data is not there. Ben Carlson (Director of Institutional Asset Management at Ritholtz Wealth Management), writing for Fortune.com, says that there are several factors to why we are not experiencing a housing bubble. Carlson credits three main factors for this: “Creditworthy borrowers, Housing supply, and Better consumer finances.” Carlson puts forth that these factors show that the prices are rising for all the right reasons. There is confidence in the security of the buyers.
However, not everyone shares this opinion. When asked if he thought the current housing market was in a bubble, speaking to CNBC, Jeff Greene said, “Absolutely. I think we’re in an Omni-bubble. There’s just so much money in corporate balance sheets… and people’s balance sheets and their bank accounts that it’s just driven prices of everything higher, but at some point, this has to stop.” Greene made a fortune shorting subprime mortgages more than a decade ago. Does that mean that he is correct? Greene saw something back in 2006. Is he seeing the same now?
In the end, we know that real estate is an appreciating asset. If you don’t believe us, ask your grandparents what they paid for a three-bed two-bath back in their day 😊. Ali Wolf, the chief economist at housing research firm Zonda, says that there are “both good and bad signs in the housing market today.” Do the research and talk to professionals. Whether you are ready to buy or build now or in the future, we would love to help you build a house that you love ❤️ , and that is ready to move into.