Most Experts Agree: There is No Housing Bubble

There is no doubt that home prices in the vast majority of housing markets across the country are continuing to increase on a month over month basis. The following map (based on data from the latest CoreLogic pricing report) reveals the appreciation level by state:

One Month Price Change Map | Simplifying The Market

These increases in value have caused some to be concerned about a new price bubble forming in residential real estate. Here are quotes from many of the most respected voices in the housing industry regarding the issue:

Nick Timiraos, reporter at the Wall Street Journal:

“Predictions of a new national home price bubble look unfounded for now, according to data.”

Michael Fratantoni, Chief Economist, the Mortgage Bankers Association:

“I don’t really see it as a bubble.”

Jack M. Guttentag, Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania:

“My view is that we are a long way from another house price bubble.”

Rajeev Dhawan, Director of Economic Forecasting Center at J. Mack Robinson College of Business, Georgia State University:

“To have a bubble, you need to have construction rates higher than the perceived demand, which is what happened in 2003 to 2007. Right now, however, we have the reverse of that.”

Victor Calanog, Chief Economist, Reis:

“The housing market has yet to show evidence of systematic runaway asset price inflation characterized by home prices rising much faster than household income.”

David M. Blitzer, Chairman of the Index Committee for S&P Dow Jones:

“I would describe this as a rebound in home prices, not a bubble and not a reason to be fearful.”

Andrew Nelson, US Chief Economist, Colliers International:

"I don't think there is a housing bubble.”

George Raitu, Director, Quantitative & Commercial Research, NAR:

“We do not consider the current market conditions to present a bubble."

Christopher Thornberg, Founding Partner, Beacon Economics:

"The housing market is far from overheated.”

SO WHY HAVE PRICES BEEN INCREASING?

Today, there is a gap between supply (number of houses on the market) and demand (the number of buyers looking for a new home). In any market, this would cause values to increase. Here are some experts’ comments on this issue:

Jonathan Smoke, realtor.com Chief Economist:

“So does that mean we’re in a bubble? Nope, that’s just what happens when demand increases faster than supply.”

Robert Bach, Director of Research – Americas, Newmark Grubb Knight Frank:

"I don’t think the housing market is overheated based on demand and supply fundamentals.”

Mark Dotzour, Chief Economist, Real Estate Center, Texas A&M University:

"We are not in a housing bubble. We are in a situation where demand for houses is much higher than supply.”

Calvin Schnure, SVP of Research & Economic Analysis, NAREIT:

“Given all the demand and little supply the residential market is FAR from overheated.”

BOTTOM LINE

Currently, there is an imbalance between supply and demand for housing. This has created a natural increase in values not a bubble in prices.


d13da094 5420 4e1f 833c a47ce605c751 295fd467 dc40 4529 98c1 4b551f4c11e3 ec52904b ad3d 4c77 a9b9 84f63f88d624 04442e2d a2d4 4af8 9ecd 58710decaa84 67b38968 35dc 4844 87f4 f13d72f3309c 7b17f117 c0ed 45e6 9e34 01c279c679f9 c428b485 427b 4456 ba57 f813178a305b 9b49fa20 9cfe 4733 b394 3b23b42f28ef a3302f94 1ae9 4d5b b5ad 36b5121adc84 a8685c55 6093 47bd 9b42 29f2a3fd8266 3c3156c9 27ae 49c1 aeef 03ff533c2623 180666f7 bfff 48f9 95e0 82497323de13 e56ae4c2 dee7 4eef 8274 1465c5d0ce4d d10f75e4 b9e5 4664 98bf 8a952a782af0 71f8b2d5 c456 438e 9446 a04b838b20af e7985f72 6dc7 4dba 99e9 f72328e2bf5d 520c49d4 fd26 4922 ba59 7f37e32322ef 6f581f2c 3113 4c7e 87a6 d89a07904465 54e10669 c75f 4770 9f1d 94ec15caf76b 39682134 5269 4116 9443 460d5a3cc463 289bbfb2 7a07 4cbb a43b 8c2b7cba3a0c b0625c37 1e9e 4b08 a7f7 46a895bcd157 7439b889 53ed 49e1 83e3 27d47bf3a5cf