The current housing bubble explained
While we can not predict the future, we can use existing data and a trend line to see what happened in the past and what is going on now. A trend line in Excel uses linear regression to predict the future based on existing data. What we use this trend line for is to show Bubbles and Crashes.
- A "Bubble" is when the Average Sale Price of a home rises significantly above the trend line for a prolonged period of time.
- A "Crash" is when the Average Sale Price of a home falls significantly below the trend line for a prolonged period of time.
The graphic below is the housing data for the past 21 years in an Excel Spreadsheet plus a Chart with a Trend Line. The data is on the top and the chart with trend line is below. We also have a PDF Copy.
- A Bubble began in 2004
- The Pre-Crash began in 2006 (Yes prices were still rising)
- The Crash began in 2008
- The Bottom was in 2011 (Lowest Price in 21 Years)
- The Current Bubble began in 2019
- The Highest Price in 21 Years is Now
A Pre-Crash is when home sales significantly decreases and the number of days it takes to sell a home significantly increases. The more significant those numbers are, then more pressure there is to lower prices. Decreasing sales and increasing DOM are not going on at this time, so we are still in a Bubble.
If you would like to know what your home might be worth today, or discuss an exit strategy for your investment properties, please feel free to reach out to me by Phone, Text, or Email.
Phone / Text 602.770.7205 - Email [email protected]
