Is There a Housing Bubble That’s About to Burst?

A housing bubble occurs when prices are out of touch with economic reality, and when the bubble bursts, there’s nothing there. Some experts are concerned that the U.S. is headed for a housing bubble, one that could burst at any time.

Though the COVID-19 pandemic resulted in millions of Americans becoming out of work and facing the possibility of eviction and foreclosure, states across the U.S. are experiencing an incredible real estate boom as home prices continue to rise.

What’s driving this boom? A combination of historically low interest rates, droves of people leaving densely populated cities because of COVID-19, and distortions in the market, such as interest rates being held artificially low as dollars are being pumped into the economy.

But the main drive: supply and demand.

Supplies of existing homes have dwindled far below the six-month level considered normal. Realtors are receiving multiple offers. Builders are working hard to keep up with demand, and flipping is back.

Factors in a bubble
The coronavirus pandemic wreaked havoc on the U.S. economy in spring 2020, and so unemployment has now become a significant factor to look at regarding a potential housing bubble.

Though the unemployment rate in 2021 is falling steadily, approximately a third of the unemployed have been out of work for at least six months, and that ratio is on the upward trend. Long-term unemployment — a period of joblessness lasting more than six months — is a dangerous financial period for households.

Not only are these individuals more likely to have depleted personal savings and other financial resources after half a year without job income, being out of work for more than six months makes it harder to find a new job.

Call RESource Atlanta:
If you are ready to sell your home in Atlanta or Georgia, reach out to RESource Atlanta to talk about a fair, cash offer on your home: https://www.resourceatl.com or 404-620-3110.

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