The results of a new survey show that real estate agents have far more confidence in the health of the housing market than most consumers do. According to Redfin’s latest survey of 1,500 Americans who’re planning to buy or sell a home in the next year, 77% believe we’re currently in a housing bubble.
That compared with just 44% of real estate agents who say the same. It suggests they feel much more confident about the state of the real estate market.
The real estate agents’ take is similar to that of most housing economists, who have often repeated over the last year of rapidly rising home prices that housing isn’t in a bubble. They argue the market bears little resemblance to the conditions that arose prior to the last crash, in the mid-2000s.
Housing bubbles are when home prices reach unsustainable growth. Such bubbles always burst when the demand for homes no longer justifies those rising prices. The result is usually always sharp declines in home values.
Conditions now are vastly different from 2006 though. In the U.S. today, housing inventories are at record lows, credit access remains tight and lenders refuse to issue risky loans.
“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,” said 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.