This was in the news recently because the federal reserve in Dallas said there were signs of a housing bubble brewing in the United States.
One of the key features of a bubble is that it pops. What people are really asking is when is this gosh dang housing market going to pop so I can afford to buy something again?
In the Bay Area, we think the market will level off a little bit but we don’t think this is a bubble. Prices have skyrocketed because there’s too much demand and not enough supply.
And it’s not like 2006 when lenders sold off bad loans and triggered a financial crisis. Prices will not necessarily come down but they will cool off a little bit. There’s only so many buyers out there willing to pay a shocking amount of money for homes. So far we haven’t seen that happen yet as the market around here is, to use a technical term, ” bananas”.