Today’s highly competitive, nuanced housing market has caused buyers to wonder if there’s an impending crash similar to the mid-2000s, but today’s housing fundamentals are largely sustainable, says Zillow. Increased housing demand, elevated sales activity, and price appreciation are three areas causing concern, but these factors are expected to last several years, proving each are sustainable trends. Zillow notes that there are market conditions similar to the mid-2000s housing boom, such as the 10.6% home value increase in March. March’s home value gain was Zillow’s highest one-month increase ever recorded.
But that view ignores the fact that the housing market doesn’t operate in a vacuum, and is driven by the interactions of a number of relatively simple but critically important fundamentals — including supply and demand, financial conditions and technological advancement. And the state of those fundamentals in 2021 is ultimately far healthier, and that health far more likely to be sustainable over the longer-term, than the out-of-whack fundamentals from a generation ago.
Examining each of these fundamental pieces on their own, including how each has evolved to its current point and how they are different from 2008, can help us paint a bigger picture of a housing market positioned to see the boom of the past year continue to roll on.