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Housing bubble expected... how bad will it be?

Submitted Mon, 04/04/2022

Home prices have jumped nearly 20% and the Federal Reserve Bank of Dallas warned this week of “a brewing U.S. housing bubble” with trends reminiscent of those that culminated in the historic financial crisis of 2008. For Americans buying or selling a home, what should they expect? NBC’s Ali Vitali reports in this week’s Sunday Focus.

Key Takeaways:

  • Housing market sees unprecedented costs & demand.
  • Low housing supply and high demand, you get high prices, but potential buyers are still looking to quickly purchase while rising interest rates are still relatively low historically.
  • Supply chain issue and inflation hits and already lagging construction industry.
  • In Phoenix potential buyers are being priced out of buying and renting. Rapidly increasing home cost + Housing prices outpacing rent + Income lagging behind home prices.
  • Real-time market monitoring finds signs of brewing US housing bubble. "... there is a growing concern that U.S. housing prices are again becoming unhinged from fundamentals." - Federal Reserve Bank of Dallas
  • However, the current suspected housing bubble is fundamentally different than the 2008 housing bubble crisis which caused a recession.
  • We are better equipped: There are lessons learned from the previous housing bubble as well as the use of newly developed advanced tools for early detection. The Feds are taking steps to stabilize the market before is spirals.
  • Result: A housing bubble expected but much smoother than the bubbles of the recent past. The drivers are not the same at they were in 2008.


Is today’s housing market in the same predicament that it was over a decade ago, when the 2007-08 crash caused the Great Recession?

The short answer is: no. America’s housing market is in far better health today. That’s thanks, in part, to new lending regulations that resulted from that meltdown.

🔗 June 20, 2022 - Here's why this housing downturn is nothing like the last one


November 23, 2022:

🔗 A house price slump is coming. Rising unemployment could make it much worse

By Hanna Ziady, CNN Business: Warning signs + Jobs are key + A drag on the economy... 6

  • US mortgage rates topped 7% last month (October) for the first time since 2002, up from just over 3% a year ago, before pulling back slightly in November as inflation eased.
  • In the United States, sales of existing homes were down by more than 28% year-over-year in October, the ninth consecutive monthly decline, according to the National Association of Realtors.
  • "Overall, this is the most worrying housing market outlook since 2007-2008"
  • Most market watchers are not expecting a repeat of the 2008 housing market crash. Banks and households are in better financial shape, and housing supply in some countries remains tight.


Citations and Further Reading:

  1. 📹 April 4, 2022 - Should the US brace for another housing bubble to burst?
  2. 📰 March 29, 2022 - Real-Time Market Monitoring Finds Signs of Brewing U.S. Housing Bubble
  3. 📰 Related article - What will Arizona Real Estate Look Like in 2022?
  4. 📰 Related article 4-21-22 - Will rising mortgage rates cool off a hot housing market?
  5. 📰 June 20, 2022 - Here's why this housing downturn is nothing like the last one
  6. 📰 November 23, 2022 - CNN Business: A house price slump is coming. Rising unemployment could make it much worse



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