According to the Federal Housing Finance Agency’s Quarterly Price Index, the US has seen 40 consecutive quarters of home price increases, with a 5% increase between the 1st and 2nd quarter of 2021 alone. In addition, the S&P CoreLogic Case-Shiller Home Price Index showed that home prices increased 18.6% in June, as compared to a year ago. Of the 20 cities factored into the index, 19 have reached their record highs. The median home price in June was $363,000, up 23.4% year over year.
While this staggering and continuance run on housing may cause concern for homebuyers and investors, experts are chiming in and saying, “not so fast”, and are viewing this housing market as a BOOM versus a bubble. CNBC real estate correspondent, Diana Olick, commented “A bubble tends to be something that’s inflated that could burst at any minute and change, and that is not the case here.” Ultra-low mortgage rates and lack of supply are fueling the market. According to the National Association of Realtors, the US has underbuilt their housing needs by at least 5.5 million units over the past 20 years. That is in complete contrast to the housing bubble of 2008 when overbuilding was an issue. With those two aspects fueling the demand for housing, home prices are expected to continue to soar at a record pace not seen since the 1970s.