Professional · Frisco, TX · Member since 2015 · 2 posts · 0 votes
11y
Earl,
In my opinion, we are not in a real estate bubble, at least not on a nation-wide basis. Obviously, the first rule of real estate applies "All real estate is local". Some markets are absolutely on fire while other markets still languish in the mire of the recession.
From the perspective of analytics, the current price of residential real estate is just about where it should be, if you graph the increase in home prices from 2,000 to 2015, while skipping the recession. Obviously, home prices flattened or decreased during the recession. Once the markets began to recover, home prices quickly returned to levels that would have been "normal" if the recession had not occurred. I'm in the Dallas, TX market. We have seen prices increase by 23% over the last 2 years. But now, they have flattened out and I expect that future prices will trend back to normal (3-4%) annual increases moving forward.
What is driving current pricing are demand and low mortgage rates. Demand will continue for at least the next 8-10 years and interest rates will continue to stay low... maybe forever. As you know, mortgage interest rates are based on stable long-term instruments like T-Bills. With every government on the planet deeply in debt, you won't see any stable government (US, France, Germany, etc) paying more than a pittance to borrow money from the public. That will tend to keep mortgage rates very affordable.