No, We're Not Entering Another 2008 Housing Bubble.
The 2008 Housing Crisis still weighs heavy in many Americans' minds. As the housing market continues to heat up, some may worry that another housing bubble is on the rise. Thankfully, the likelihood that another housing bubble will occur is low.
After 2008, the mortgage industry went through a total overhaul. The market was less regulated, so people were obtaining home loans that could not pay them back. The mortgage industry is more regulated now than in 2008 because of the fallout from the Housing Crisis, so a housing bubble is unlikely. People now have to go through a much stricter process to qualify for a mortgage loan. The federal government also created the Consumer Financial Protection Bureau to regulate and enforce these more stringent standards on the financial sector.
If you are still concerned about the soaring home prices, don't be; it is merely a matter of supply and demand. Due to historically low interest rates, more people are looking to buy homes than are available. The limited supply of homes is driving up home values. Also, Covid halted the supply of raw materials needed for home construction. Once new home construction is completed, home prices will begin to fall.
The Federal Reserve is also keeping the housing market stable by its actions. It has purchased $1 trillion worth of mortgage-backed securities to keep mortgage rates low and bond markets liquid. The Fed's preemptive actions quell any immediate signs of financial instability in the housing market.
The odds of another housing bubble are incredibly slim. The mortgage industry is more regulated than ever before, and the Fed's financial presence ensures stability for the time being. If you are looking to buy or sell in this market, you should not worry about another 2008 Housing Crisis happening anytime soon.