Have you been wondering, “When will the next housing bubble burst?” If so, you’re one of many Americans curious to see if the current housing market trends will continue — or not. The experts have some guesses based on the data they’ve evaluated so you can see what the future may hold!
Curious to learn more? Read on to learn about whether there will be a housing bubble burst!
Look at the Mortgage Rates
When it comes to predicting a housing bubble burst, mortgage rates can help give some sense as to what is going to happen in the housing market. Lower interest rates encourage more people to look at buying homes. And ultimately, that helps to drive the housing market on a path of continual growth.
With lower interest rates in 2020, more younger buyers hit the market — including millennial buyers. This increased the demand for homes — and ultimately the prices start to go up, too.
When will we see the next housing bubble burst? We’ll see it when circumstances lead to demand for homes slowing and prices dropping. And that can leave a lot of people with undervalued homes.
Supply and Demand Contribute to a Bubble Burst
While 2020 started off with low demand due to the pandemic, that demand started to grow. Many experts are predicting that there will be a housing bubble in 2021 due to lower mortgage interest rates and increased demand as the pandemic eventually eases.
When the housing supply is low but demand is high, that sets the stage for a housing bubble. A bubble occurs when the housing market is accelerating — but maybe not at a sustainable pace.
New home construction also plays a role. With increased demand, builders start building more new homes. While this is good in the short-term, it eventually results in an oversupply of homes. And when we see a bubble burst, the demand sinks — and so do the home prices.
When Will the Next Housing Bubble Burst?
Opinions are varied on what the next year holds for the housing market. Thanks to lower interest rates and a gradual uptick in interest from potential buyers, the thought of a housing collapse similar to the one from 2007 seems unlikely. But there are some additional factors that come into play.
The answer to this question may depend on where you live. While some experts don’t think a crash is imminent, they acknowledge that some cities may be at greater risk. Desirable locations like Austin or Seattle have seen population growth and strong demand, but because of this, they may be looking at a burst bubble in 2021.
Keep Your Eye on the Housing Market
Are you still wondering, “When will the next housing bubble burst?” The answer is complicated, but the economy and interest rates are a good indicator of what’s to come. Keep your eye on the markets and make your housing decisions carefully.
To find more of the latest info on real estate trends, check back for new articles!