HOUSTON — A lot of people who lived through the 2008 crash are wondering if this red-hot housing market is just another bubble that will burst.
Let’s connect the dots.
Real estate red hot now
If you have been thinking of buying or selling a home recently, you know it’s getting pretty crazy out there.
Homeowners are reporting buyers offering tens of thousands over the asking price. People are plopping down cash for homes they haven’t even seen in person and open houses are attracting crowds usually reserved for Black Friday.
The rapidly rising prices are reminding some of the early 2000s. That all came crashing down in 2008 with a devastating effect on the economy.
Low mortgage rates, high demand
But experts say there are some big differences between now and then. 2008 was fueled by speculation, loosened loan practices and an oversupply of homes. This market is driven by mortgage interest rates at historic lows, a low supply of homes and increasing demand because of the pandemic. Plus, bank rate lending criteria strengthened after the 2008 crash and remained strict.
Price problem crash unlikely
But that doesn’t mean there isn’t a problem. The experts say this doesn’t look like a bubble but they are concerned about sharply rising prices. When the market cools, you don’t want to have spent more on a house than it’s actually worth. But they expect prices to plateau not plummet.