Are we in a bubble? Over the summer it seemed everyone was speculating upon whether or not we are in the midst of a housing price bubble. It is too early to predict a market shift in residential real estate, but there are some common indicators that contributed to the previous market crash rearing their heads again.
Wage increases have not kept the same pace as home prices, leading to affordability concerns - particularly with lower-priced homes. Additionally, predicted interest rate hikes will continue to affect borrowers’ buying power.
On the other hand, demand continues to outpace the supply of available homes in many markets. This trend leads to increased prices overall. Median Sales Price of single-family homes increased by 3.9% to $369,000, and by 11.1% to $180,000 for condos and townhomes.
Overall, consumer spending on renovations and home goods is up, and more people are entering the workforce. Second-quarter GDP growth had its strongest showing since 2014, coming in at 4.1%. Housing starts are down, which is impacting supply. Lending practices are solid, and the economy is growing, so it would appear that a market rebalance, rather than a housing price bubble, is a more likely scenario.
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Gloria Singer is the Broker of Boca Expert Realty, a boutique Boca Raton real estate company with a focus on professional service and an unparalleled customer experience. Our select agents are amongst the top performing professionals in the field. Visit www.BocaExpert.com for information on Boca Raton, Delray Beach and Highland Beach real estate and to connect with an expert in the local market.