Are Home Prices Approaching Bubble Territory?

    As home values continue to rise, some are questioning whether we are approaching another housing bubble. Zillow just reported that:

    “National home values have surpassed the peak hit during the housing bubble and are at their highest value in more than a decade.”

    Though that statement is correct, we must realize that just catching prices of a decade ago does not mean we are at bubble numbers. Here is a graph of median prices as reported by the National Association of Realtors (NAR).

    Are Home Prices Approaching Bubble Territory? | MyKCM

    We can see that prices rose during the early 2000s, fell during the crash and have risen since 2013.

    However, let’s assume there was no housing bubble and crash and that home prices appreciated at normal historic levels (3.6% annually) over the last ten years.

    Here is a graph comparing actual price appreciation (tan bars) with what prices would have been with normal appreciation (blue bars).

    Are Home Prices Approaching Bubble Territory? | MyKCM

    Bottom Line

    As we can see, had there not been a boom and bust, home values would essentially be where they are right now.

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    Danny Cheung

    I spent over twenty five (25) years with the Department of Defense in the hardware/software design and development as well as program management prior to joining the Group in a full time capacity. I am thrilled to put my years of experience as an Electronics Engineer to assist and lead our Real Estate Group to the next level. I am committed to establishing the tools and resources necessary for our team members to work more seamlessly and effectively thus ensuring our clients full satisfaction. My wife and I have two daughters and a dog (he's more like our son). I enjoy travelling and watching sports especially football…Go Skins!

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