![]() While not a true factor of affordability, the population of home buyers is also an important factor of housing demand. They are an indicator of the health of the overall economy, with rising housing starts a sign of a growing economy. This provides a good measure of the supply of new homes that will be on the market in the coming months. Housing Starts are the number of new residential construction projects that have started within that month. Housing Availability in a Housing Bubble Housing Starts The relevant components of affordability are: The major data points of the availability are: An accurate way to look at these economic forces is to gauge the availability (supply) of housing against its affordability (demand). The basis of modern economics is that the price of goods or labor are determined by supply and demand: the greater the demand, the higher the price the greater the supply, the lower the price. “Warning: The Housing Bubble Could Get Worse.”Ī review of supply and demand factors of housing will show a different situation than the doomsday headlines in the media. ![]() “US Housing Enters 2021 In A Massive Bubble.” “ Without a doubt, we are in the early stages of a housing market crash.” The continued surge in home prices through the pandemic has many “experts” portraying the current environment as a housing bubble similar to the lead up to the 2008 Financial Crisis, with this news shaking real estate investments. Recent headlines have bombarded us with news of the pending housing market collapse. So, taking a close look at these factors in our current environment, the question remains, “Are we in a new Housing Bubble Now?” Remember, it is supply that bursts bubbles, not demand. Then prices drop dramatically as there are no buyers left to handle the continued supply of the asset. Those rising prices become unsustainable as supply increases. An asset bubble occurs when excessive demand has buyers driving prices higher in the face of rising supply.
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