The healthy state of the domestic real estate industry, over a decade now has some people worried. Although, why? It’s healthy, as current real estate trends show. And, market dynamics remain solid. So, why the worry? Well, it’s just this state of affairs reminds some of the last real estate bubble and crash that followed. That said, it might help to compare the dynamics of real estate bubbles, then and now. As a result, that should shed light on the question and the answer, hopefully.
Dynamics of Real Estate Bubbles and the Current Economy
One key contrast likely sets the current period apart from the mid-2000s bubble. And, that is the economy growth factor. It’s shows steady momentum. In fact, a stable economy and low unemployment are great drivers for current buyers and sellers. Not to mention low interests rates. Although, a trend in high home prices an low inventory has stopped some home buyers. As a result, there’s plenty of room for improvement in these areas.
The economy also shows positive signs in GDP. That’s the gross domestic product. And, it’s on an upward trend, slowly but steadily. For example, it grew by 2% earlier this year. In fact, that’s a key indicator for consumer confidence and spending. Although when it comes to the dynamics of real estate bubbles, what about the drawback in this current period? Wasn’t it the high home prices and low inventory issue?
Builders see the need to step up. And, they know demand for new homes is on the increase. Although, while they have the capacity to step up, many cite labor shortages. Also, they cite the high cost of materials. That said, these are the areas where the most good can be done with innovative thinking and vision. Not to mention mix-use and walkable communities have increased in popularity.
When it comes to high home prices, a new industry may be emerging. And, it revolves around taking up an equity stake in a home. As a result, buyers can have the home that they want. Then, buy out the equity stake over time.