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Are we experiencing a housing market boom or bubble? Experts say boom, and here’s the difference

Experts believe the historical changes are shaping the housing market into a boom- not a bubble.

The median price for a home had reached $363,000 in June of 2021, which is a 23.4% year over year increase in price.

Growth like this has not been seen in decade and it happened in just over a year.

So what makes it a boom instead of a bubble, and what does that mean?


Many think it appears to be a bubble because of the dramatic rise in prices in such a short period of time.

Bubbles are quite literally quickly inflated and could burst at any moment, resulting in a housing market crash in this situation.

The reasons behind why the market has boomed is due to some of the lowest mortgage rates available in recent years.

In March of 2020 the average rate for a 30 year fixed mortgage was at 3.45% but in July it was at 2.87%.

The housing bubble in 2008 faced issues because there was too much supply in housing; overbuilding was an issue and they could not fill the number of homes.

In the last 20 years the housing industry has underbuilt homes.

The boom this time around is due to higher demand and less supply.



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