Will There Be a Housing Bubble?

Cornerstone Mortgage Group, a leading mortgage company in New Jersey offers premier mortgage services. Whether you are looking for a home loan to purchase your first home or looking to get a better mortgage rate on your current house.

There is currently no need to worry about a housing bubble or a significant decrease in the value of homes in the coming years. Here are four reasons why:

• Under-supply of homes today: Unlike the years leading up to the 2006-2007 housing bubble when the US was building around 50% more homes than needed, we are currently under-building homes. This has resulted in a shortage of at least 5.5 million homes in the US.
• Millennials buying homes today: The millennial generation was too young to buy homes during the 2006-2007 housing bubble. However, in the past few years, they have just started to buy homes, and demand among first-time homebuyers is likely to increase in the coming months and years.
• Strong jobs market today: During the 2006-2007 housing bubble, the economy crashed, and many people lost their jobs. However, during the Covid recession, it took less than a year for the unemployment rate to drop back below 5%. Today, the jobs market is very strong, with more job openings than at any point in the past 20 years, and rising wages. This means that people have jobs and can afford to buy homes.
• Homeowners are under-leveraged today: Many people who bought homes in 2006-2007 did so with little or no money down, which led to a lot of foreclosures when house prices started going down. However, today over 42% of homeowners have more than 50% equity in their homes. This means that home prices would need to plunge by more than half their current value in order for most homeowners to be in a negative equity situation.

In conclusion, the combination of under-supply of homes, millennials entering the market, a strong jobs market, and under-leveraged homeowners all indicate that there is no imminent housing bubble to worry about. If you're considering buying a home, now might be the perfect time to do so.

Contact Cornerstone Mortgage Group for professional guidance and assistance in your home-buying journey.