That said, demand is slowing: Lenders issued roughly 3.59 million mortgages in the third quarter of 2021, down from 3.92 million in the second quarter.
On the demand side, low mortgage rates - you can still find 15-year rates near 2% and 30-year rates near 3% - are enticing many to buy now and the remote work boom is leading to reshuffling as people reevaluate what they want and need in their home, says Redfin chief economist Daryl Fairweather. “With strong buying demand and under-building limiting the amount of housing supply,” Hale says, “we’re likely to see home prices remain high even if reduced affordability limits the pace at which they can grow.” Plus, that is happening at a time when supply chain issues are rampant, making many building materials and labor expensive. In fact, she says we’re so under-built that we’re unlikely to see this change in the next five or six years, even if the current pace of construction were to double. has underbuilt housing by at least 5.5 million units, and Hale estimates that we’re about 5 million units short. “In these bubble cases, those who purchased homes or other investments when prices were high may see the value of their homes or other assets remain below their purchase price for years into the future.” Housing prices alone don’t mean a bubbleīut many pros say it’s unlikely we will see a collapse in home prices, because unlike in 2008, there’s not an oversupply of housing, and instead there is an undersupply: The National Association of Realtors notes that the U.S.
“To most consumers, a bubble in housing or any other investment is a run up in prices that is very rapid and that is relatively shortly thereafter followed by falling prices,” chief economist Danielle Hale says.
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