Signs of a housing bubble are brewing

US home prices have soared to new heights and keep on climbing, and now some researchers and economists are saying they have seen signs of a housing bubble brewing. “Reasons for concern are clear in certain economic indicators … which show signs that 2021 house prices appear increasingly out of step with fundamentals.” Many Americans are still scarred by the last housing crash in 2007, which was fueled by cheap credit and lax lending standards that resulted in millions of homeowners owing more on their homes than they were worth. And there are lots of reasons why home prices have risen steadily over the past decade – and shot up even more significantly in the past two years – including supply and demand imbalances in the market, rising labor and construction costs and how high or low the interest rates are for a mortgage, the researchers pointed out. The researchers recommended policy makers and market participants closely watch local markets for booms in prices in order to better respond, “before misalignments become so severe that subsequent corrections produce economic upheaval.” Bubble brewing The behavior of homebuyers and sellers over the past two years has been anything but normal, the researchers pointed out.