| In case you haven't noticed so far this year, everything related to the economy and investing is a bubble. Or at least, potentially anyway. If you look at the Google trends data for the search term "housing bubble" over the course of the last 12 months, you'll notice an undeniable jump in search volume for this topic and particularly so over the last month. The media has found another buzzword to latch onto, but there seems to be a plausible reason for this. How did we get here? The thought that we may eventually find ourselves trapped in another housing bubble is the result of a culmination of factors that have all coalesced perfectly over the last year. The pandemic was kind of the spark that lit the fire when it began causing supply shortages and straining supply chains around this time last year, but it was soon joined by other issues. Mortgage rates have been at some of their most favorable rates ever. Today, you can find 30-year fixed-rate mortgages ranging from about 2.6-2.8% and a 15-year fixed rate for lower than that. Millennials are also reaching the prime age to buy a home, further increasing demand on an already low supply. The implications on home prices Most homes are having trouble remaining on the market for more than a month, and sometimes for much less in high-demand areas. Rates are great and demand is high amongst both investors, contractors, and your classic homebuyers, creating a situation where the competition is more than stiff. Prospective home buyers are more often than not being required to put forth the full 20% down or more, while also competing with all-cash parties that have increased from up to 23% over the last year. All of this pent-up demand combined with the temporary shortage has created an undeniable bubble of sorts, with prices squeezing higher. Relief on the way...maybe? Luckily for those looking to buy a home in the next few years, we should expect some level of normalization to level out the housing market as time goes on. Contractors are aware of the demand and want to build, only being limited by our near-term supply shortages, higher lumber prices, and local skilled labor deficits. Regardless though, new home starts have increased by 20% this March—the highest increase we've seen since 2006. While adding more supply to the market will undoubtedly provide some relief to home prices, other factors like mortgage rates, unemployment, and overall financial stability amongst homebuyers will all need to cooperate as well. Experts are in relative agreement that things will level out, but buyers should still remain wary for the time being. 🧵 Have some thoughts on this topic? Join the thread: | 
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