The typical home has seen a 40% increase in monthly payments over a year ago, said Yun, with a roughly 20% increase in home prices and another 20% in higher mortgage rates. “All the metrics related to income and affordability in housing appear out of sync and the strange movement in the data is really caused by lack of supply,” said Lawrence Yun, chief economist at the National Association of Realtors. The persistent lack of supply in today’s market combined with surging demand is driving up prices and pushing more prospective buyers to the sidelines. So what does a potential bubble mean for homebuyers and sellers? “Reasons for concern are clear in certain economic indicators … which show signs that 2021 house prices appear increasingly out of step with fundamentals.” “Our evidence points to abnormal US housing market behavior for the first time since the boom of the early 2000s,” researchers at the Federal Reserve Bank of Dallas wrote in a blog post last week. 'The top eight cities in the nation, which were very hot and very millennial heavy, have seen enormous declines in rent, while secondary cities in the same regions have benefited,' said Anthemos Georgiades, co-founder and chief executive of single-family home for sale in Washington, DC, USA, 18 February 2022.

In cities like Newark, New Jersey, Sacramento, California, and Richmond, Virginia, where people are relocating, rents are moving sharply in the opposite direction. In San Francisco, rents fell 24% in 2020, according to, which tracks rents across the country. They were down nearly 20% in New York and 17% in Boston. As people leave densely populated cities to escape COVID-19 and congestion, rents are dropping. Meanwhile, the segment of the real estate market that seems to be working most efficiently at the moment is the rental market. If homeowners can't sell or refinance, there could be a spike in foreclosures and the supply of homes on the market would increase sharply, pushing down prices. They can sell or refinance and banks are well off either way.' 'We saw people's equity grow 11% last year and it's expected to grow another 6% this year,' Santarelli said. He also believes homeowners will either be able to sell their houses and condos and walk away with equity, or refinance or modify and tack whatever they owe to the back end of their mortgages. He believes renters will find jobs when the economy rebounds and they will not join the legions of the homeless. Santarelli is confident the damage will be minimal. There's no question these policies are needed to keep people from being displaced in the midst of a pandemic, but they will eventually have to be lifted and it is not clear what will happen when they do. The moratoriums on evictions and foreclosures are also distorting the market. Either development or both, could lead to a pullback in prices.

'What I'm concerned about is that prices will continue to appreciate at 10% to 15% a year and that's not sustainable.'Īt a certain point, interest rates will rise and there won't be enough buyers coming in from more expensive markets to keep paying the higher prices. 'We had a 10.2% increase in home prices in Sarasota in 2020,' Goldman told USA TODAY. 'The Fed will keep buying bonds far into the future despite what could be a booming economy in 20,' Goldman said in his monthly newsletter. And no change in policy is expected any time soon. Until the Federal Reserve halts its bond buying and interest rates begin to rise again, real estate prices will continue to climb, says Robert Goldman, a real estate agent with Michael Saunders & Co. That makes borrowing cheap and encourages investors to buy riskier assets like stocks and real estate, driving prices of those assets ever higher. With the Federal Reserve continuing to buy Treasury bonds and other securities under its quantitative easing program, interest rates are being held artificially low as dollars are being pumped into the economy. An out-of-balance housing marketīut these healthy fundamentals don't mean there aren't worrying distortions in the market. These people have to go somewhere and that's why I'm so bullish about real estate over the long term.'. 'That's the highest rate in over 110 years. 'About 52% of young adults from 18 to 29 are still living with their parents,' Santarelli said. Santarelli added that the supply imbalance will only get worse as more than 140 million millennials and members of Gen Z move into rental units and starter homes in the years ahead. Marco Santarelli, founder and CEO, of Norada Real Estate Investments.

Housing bubble