Housing Bubble Ready To Burst? – LoanLove.com Takes A Look At The Evidence

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A new article from Loan Love examines the causes for the predictions of a new housing bubble burst in 2014.

LoanLove.com is a borrower advice website that is dedicated to keeping new home buyers and experienced home owners updated on current news and events which could affect their home loan options or their home ownership experience. A recently featured article on the website continues to provide readers with up to date information regarding the predictions that the housing bubble is ready to burst in 2014.

This new article titled “Housing Bubble Burst In 2014? (The Possibility Is Very Real)” reviews the many reasons analyst and experts are talking about another real estate bubble burst this year. The article states that affordability is one of the main issues pointed to as being evidence of an impending burst according to economists. It says,

“Their concerns arise over the pressure that accelerated home prices place on those wishing to live the American dream by purchasing a family home. Year-over-year price increases could signal another housing bubble, warn some economists. Home prices jumped upward in 119 out of 164 major metro areas the final quarter of 2013, according to the National Association of Realtors. Rising home prices may seem to be the sign of a recovering and prosperous market, but there is a small group of economic analysts pointing to the current situation as even stronger evidence that a housing bubble is about to burst, particularly since interest rates are supposed to rise considerably higher throughout 2015. The same scenario with rising interest rates occurred throughout the years leading up to the last big burst in 2008.”

The article continues, “One of their biggest concerns is that first-time home buyers are being priced out of the market. First-time buyers are essential to sustaining a healthy housing market because they provide a pool of buyers for those wishing to sell their home and upgrade to a new one of greater value. Without a strong supply of first-time buyers, existing home owners will have difficulty selling their home or even reaching qualified buyers. These economists also point to lackluster improvements in the unemployment rate and the influx of new investors willing to pay above list price for rental homes as complications that serve as further evidence that a bursting housing bubble is inevitable.”

In addition, lagging new construction and shifts in loan practices are also seen as contributors to a possible upcoming housing bubble burst. To end, the article warns, “While these analysts are not predicting as severe a bubble burst for the housing market as was seen a few short years ago, they do see a false sense of security over a recovery they say simply hasn’t occurred. If housing prices are allowed to continue to rise at rates well above the pace of inflation and rise in rental rates, they warn, the severity of the potential housing market bubble could reach crisis level.”

For more information on this subject, click here to read the full article on LoanLove.com.

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Kevin Blue
Loan Love
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