Here’s why experts say hot housing market is not a bubble
By: AZ Big Media
As home prices continue to break growth records, a panel of housing experts and economists surveyed by Zillow does not believe the market is in a bubble. The latest Zillow Home Price Expectations Survey1 polled more than 100 experts from academia, government and the private sector to gather their opinions on the state of the housing market and future growth, inflation forecasts and recession risks.
Of those surveyed, 60% said they do not believe the U.S. housing market is currently in a bubble, compared to 32% who think we are in a bubble, and 8% who are not sure.
“Americans have seen home values rise at record rates over the past few years. But although a recession is looking more and more likely, the housing market today is a far different beast than what we saw in the mid-2000s,” said Zillow economist Nicole Bachaud. “Unlike in 2006, this market is underpinned by strong fundamentals and has been built on mortgages with sound credit, factors that won’t change in the near term.”
The most popular reason for respondents rebuffing the bubble thesis is strong market fundamentals, including demographics, scarce inventory and shifting housing preferences. Low credit risks as a justification followed, due to sound loan underwriting and the overwhelming share of fixed-rate, fully amortized mortgages. Another large group of respondents reject the term “bubble,” which implies a subsequent crash that they do not believe is imminent.
Among those who do believe we’re in a bubble, unaffordable prices in the absence of record-low mortgage rates is the chief rationale.