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DALTX Real Estate > Fort Worth Realtor > Are You Waiting on The Housing Bubble to Burst? Here’s What You Need to Know
Fort Worth Realtor

Are You Waiting on The Housing Bubble to Burst? Here’s What You Need to Know

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Contents
What is a housing bubble?But, is that what we have?Sorry, but there’s no bubble. What now?
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How long will buyers have to wait for the housing bubble to burst?
(Photo: Pixabay)

A week doesn’t go by without someone asking me, “When do you think this real estate bubble will burst and prices will decline and not be so steep?”

Well first of all, if I could tell the future I probably wouldn’t be putting on bow ties and slinging real estate.

Secondly, are we really sure we are in a housing bubble?

What is a housing bubble?

A housing bubble is when, “there is a period where house prices increase dramatically, driven more and more by speculation then house prices fall dramatically,” according to Wikipedia.

That seems pretty simple. If investors and speculators feel that a home will gain value quickly, they will buy, buy, and buy and that will cause prices to increase rapidly in hopes of selling the same home for a large profit in the near future … but instead, the value and prices of the homes drop rapidly.

More specifically, “a housing price bubble has a dramatic increase in real prices, at least 50 percent during a five-year period or 35 percennt during a three-year period, followed by an immediate dramatic fall in the prices of at least 35 percent.”

In the Dallas-Fort Worth area, we have certainly seen a drastic increase in new and existing home prices in the last three to five years, that’s for sure. Take a look at this chart from the Greater Fort Worth Association of Realtors showing that the median sales price for a home in Fort Worth has increased 22 percent from September 2020 to September 2021.

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Fort Worth’s price increases of 22 percent in 12 months could indicate a bubble

So a housing bubble is when prices are high and inventory is high — thus creating an artificial market where the rich get richer and the masses are forced either paying too much money for a home or, having already purchased at a high price, are left with a home that has dropped drastically in value and now have a negative asset.

But, is that what we have?

High prices we have, but what about high inventory? That’s definitely something that is not part of this current real estate market.

Based on the stats above, active listings have dropped 23 percent from 2020 September to 2021 September. That doesn’t sound like the definition of a housing bubble.

What about the last housing bubble? Did that meet the definition of a housing bubble and can we forecast a similar outcome for our current market?

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According to FRED, the last housing bubble really didn’t cause home prices in Texas to dip all that much

Isn’t that what we are taught, “past experience will indicate future results?”

According to the Federal Reserve Economic Data (FRED), during the last housing bubble, Texas housing prices only declined about 4 percent in value.

That was a housing bubble when inventory and pricing were at an all-time high. Remember, we are currently not at an all-time high for inventory.

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This graph isn’t my heartbeat, it shows how there was all-time highs in inventory and pricing during the Great Recession

Sorry, but there’s no bubble. What now?

Now you should realize and be able to tell people at parties that there is no housing bubble just waiting to burst. If you are standing on the sidelines waiting for a “good deal” where you think you can lowball a seller or think you can wait for overall housing prices to drop, better get ready for a long wait.

Does this mean “deals” can’t be had? Certainly not.

With proper education and planning and patience, any prospective home buyer can find a property priced just right for their budget. It might take a while, but with the right real estate sales professional, it’s possible.

Those who have bought during this season of high prices and low inventory, you should know that your purchase is not in vain. According to the data, that home purchase — even at a record-high price — is going to continue to increase in value so when the current owners go to sell in the future, they will realize a nice return.

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Hate to burst your bubble – but there is no housing bubble in Texas

Therefore, there is not a housing bubble.

If someone tells you that prices are going to fall soon, they don’t know the data. They don’t understand this market. They don’t understand that there is an all-time low in inventory and an all-time high in people moving to the Lone Star State who are ready and willing to spend whatever it takes to own a home.

If you are in the market to purchase a home, fear not. The data suggests your purchase will be a profitable investment in years to come. If you’re sitting on the sidelines waiting for something to happen (that’s not going to happen) to drop prices back to 2009, you might want to invest in a thick cushion to sit on because you’re going to be on the sidelines for a good long while.

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TAGGED:Federal Reserve Economic DataFor sale Fort WorthFort Worth Real EstateHousing BubbleSeth FowlerTarrant County TuesdayWilliams Trew Real Estate
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