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Another bubble?

Another bubble?

With markets coming back to life in many areas of the country, some are raising concerns about the possibility of another housing bubble. Are such fears well-founded? According to this post on the KCM Blog, such fears are overrated. Throughout most of the nation (91 out of 100 largest metro markets) housing prices, even though on the rise, remain undervalued. Even in areas which are overvalued, price increases remain at percentages far below those of the 2006 to 2007 bubble. The KCM piece cites three other reasons indicating we are not headed for another bubble:

1. Supply is starting to increase: as more people see prices going back up and homes selling, they are deciding it’s time to again enter the market.

2. Demand decrease in certain demographics: as prices continue to rise, certain segments of buyers, particularly investors, will begin to back off.

3. Rising interest rates: as mortgage interest rates continue to increase, buyers will be able to afford less.

Thus, it does not appear there’s another housing bubble on the horizon any time soon. However, all these factors continue to indicate now is a good time to jump into the market. If you’re planning on buying or selling, don’t wait for interest rates to go up – start looking at things now. I’d be happy to discuss your individual situation. Please give me a call!

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