With Elevated Home Prices Do We Expect a Bubble?

In the last five years, home prices across the country have been increasing by leap and bounds. According to the Economist, a 17% increase has been witnessed in the last three years alone. The rising prices have raised concern among some speculators and analysts that we might be headed for a housing bubble. “Should we then be worried of the home market crash?” the answer is no. Unlike the previous housing boom, which was encouraged by a lenient lending system, the rise in home values today is as a result of the forces of demand and supply. Simply put, there are many buyers on the market than there are sellers. According to a home sales report by the National Association of Realtors, the constrained housing supply is as a result of low inventory levels. The report indicates a four-month supply of inventory which means a less than four month period …