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Housing Bubble: Concerns Emerge as Recovery Continues

As the US continues on a steady recovery, experts are beginning to worry about a housing bubble in the coming years.

As we have seen a fairly consistent recovery for the past couple of years now, the market seems to be getting back to a near normal stage, although not without concerns. As we are seeing trends like high negative equity and lower mortgage rates, a large percentage of polled experts foresee another housing bubble as a result.

This hypothetical bubble will be caused from what is looking like distorted market conditions. On top of this, the government is currently spending $85 billion a month to cover its balance and keep mortgages low with bonds and securities. These actions are running out and mortgage costs are rising.

Possible solutions to this hypothetical problem would be to pull back even more on support to the greater economy, or removing all stimuli to the greater economy which could help prevent a housing bubble. One thing is for sure, at the current appreciation values, sustainability is nearly impossible and would make housing affordability extremely low in the coming months and years.

How do you feel about a possible housing bubble, after the recent recovery? Do you see increased values at a sustainable rate in your area? What do you think should be done to decrease the risk of another market crash?

We'd love to hear your thoughts and opinions in the comment section below.

Photo Courtesy of justmakeit’s Flickr

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