Despite a recent dip in the stock market, changes are not likely to aggravate another housing bubble. In fact, they may signify a slowdown in climbing home prices.
MarketWatch points to a number of differences between conditions today and those before the 2008 crash, including absence of home builders building en masse on spec. The changes in today’s stock market could instead signify that the steadily increasing housing prices might soon slow down. Stock markets tend to drop when interest rates go up, and rising interest rates could in turn have a cooling effect on bidding wars and ensuing price climbs.
“This is not a bubble,” said Joseph Kirchner, senior economist for Realtor.com. “A bubble happens in the housing market when builders are irrationally building houses on spec when demand is falling or when buyers are seeing prices are going up and can’t really afford to buy but do so because they figure they can build up equity quickly.”
Advertisement
Related Stories
Single-Family Homes
What Does It Cost to Build a Single-Family Home?
A closer look at the itemized costs in each stage of construction for a single-family home
Builders
A Look at the Boom in Home Builder Stocks During 2023
In 2023, stocks for the 10 biggest U.S. home builders outperformed the S&P 500. What does that say about the housing market?
Financials
Housing Demand Could Rebound in 2024 as Mortgage Rates Ease
The Mortgage Bankers Association predicts lower mortgage rates could bring homebuyers back into the market in 2024