A new survey shows that real estate agents are more confident about the state of the market than many consumers. Seventy-seven percent of home buyers and sellers say they believe there’s a housing price bubble where they live, according to a Redfin consumer survey of 1,500 respondents who plan to buy or sell in the next year.
On the other hand, less than half—44%—of real estate agents say they believe there’s a housing bubble in their market, with the rest feeling far more confident about the state of the market.
Over the last year, many leading housing economists have said that while housing prices are indeed rising quickly, this isn’t a housing bubble, bearing little resemblance to the booming market conditions that led to a financial crisis in the mid-2000s.
Housing bubbles occur when home prices reach unsustainable growth. They eventually burst when demand can no longer justify the rapidly rising home prices. Sharp price declines can result.
But this isn’t 2006. Housing inventories are low, credit remains tight, and lenders aren’t issuing risky loans as they did then.
“Home buyers and sellers are rightfully concerned about how fast prices are rising, especially those who remember the housing market crash during the Great Recession,” says Daryl Fairweather, Redfin’s chief economist. “What we’re going through right now is closer to a ripple in the water than a bubble. Mortgage rates are already going up, which will likely stabilize demand and reduce the risk of a bubble that could burst.”
Home prices are expected to slow in 2022. The National Association of REALTORS® predicts price growth to moderate to 3% to 5% in 2022, much lower than the nearly 16% annual growth existing-home sale prices posted in December 2021.