Housing Bubble or Not?

Housing Bubble or Not?

Lately, when I read comments on social media I am noticing the fear from many locals who continue to claim that we are in a housing bubble.  Is it true?  Are we in fact in a housing bubble?  Hopefully this blog will help ease any fears you may have about some of the chatter that exists from the general public.  

Our Local Market

For starters, we are not in a housing bubble, but we are going through a local "boom."  Our micro economy is thriving, the Puget Sound is a gorgeous place to live, and housing is unfortunately limited.  The Puget Sound Regional Council estimates around 236 people are moving to the Seattle area each day, which is well over 1,000 people per week.  Even if new construction were to build houses at a faster pace, we could never keep up with this demand.     

What is a Real Bubble?

Secondly, when the country was actually in a real estate bubble back in the early 2000's, the writing was on the wall, and it was well covered in the media.  No income, and no down payment loans which were well rooted in greed, and zero lending regulations, lead us to the peak of a downward snowball affect. That is what a "bubble" actually looks like. This approach was not sustainable, and it really showed in the end.  

In order to purchase a home today, one needs cash, excellent credit, and underwriters sift through your entire life and portfolio.  Just take out a mortgage, and you will quickly feel the heat by these mortgage companies.  

The Real Crisis

Lastly, the real crisis that is happening in our local market and many other real estate markets is affordability.  The gap between the "haves" and the "have-nots" continues to grow, and the middle class continues to shrink.  When one pays up to 40% of their income in rent, and banks require a down payment to buy a house, how can one afford to save?  A new survey just released by Career Builder states that 80% of Americans are living paycheck to paycheck.   

In my professional opinion, I think this is the real crisis, and will continue to challenge everyday working people.