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Heading towards another housing bubble?

Are we heading towards another Boston condo housing bubble?

The U.S. housing market has been an unlikely beneficiary from the Covid-19 pandemic.

During the pandemic, home prices have climbed at a record pace. The median price for an existing home reached over $363,000 in June 2021, a 23.4% year-over-year increase

However, according to most experts, the market is shaping up to look more like a boom rather than a bubble.

While speculation certainly is a factor, the main cause for the current housing demand is low mortgage rates. At the start of the pandemic in March 2020, the 30-year fixed-rate mortgage rate sat at 3.45%. By July of this year, that number had dropped to 2.87%.

Supply is also an issue. According to the National Association of Realtors, the U.S. has underbuilt its housing needs by at least 5.5 million units over the past 20 years. That’s a stark comparison to the previous housing bubble in 2008 when overbuilding was the issue.

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Are we heading towards another Boston condo housing bubble?

“Absolutely. I think we’re in an omni-bubble. How long does it last? It depends. How long do you keep the faucet open and this money running?” billionaire Jeff Greene said on “Power Lunch.”

Greene is not the first person to suggest the market is overheating, although his previous bet against the housing market in the mid-2000s makes his comments Friday notable. Recently, Google searches for “When is the housing market going to crash?” have spiked dramatically.

“When you see prices go up the way they’ve gone up, you have to ask yourself: Why did this happen?” Greene said, contending the robust monetary and fiscal policy response to the pandemic played a key role.

“I think we’re going to have inflation that no one … is forecasting whatsoever, and it’s going to have to lead to much higher interest rates and that is going to slow down all these markets,” Greene said.

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