What is a Housing Bubble?

What is a Housing Bubble?

Understand what a housing bubble is.

A housing bubble occurs when the number of buyers exceeds the supply of houses available on the market, leading to a sharp increase in house prices. Normally, demand to buy and pricing continues to skyrocket until the bubble bursts—buyers are priced out of the market, interest rates rise, and there’s a steep drop in house prices. It may even result in a housing market crash. 

Here are some signs to recognize the onset of a housing bubble, when it bursts, and how you can navigate through both. 

Recognize when you’re in a housing bubble.

If you come across news, either on TV or in general conversations, about an urgency in buying houses and rising house prices, you’re experiencing a housing bubble. Housing bubbles are created when the market becomes easier to enter or when an influx of people relocates to the area, increasing the demand for houses. Usually, it’s preceded by the lowering of interest rates and credit requirements, as well as increasing wages that create higher demand for houses. 

Like any bubble, housing bubbles inevitably burst. Interest rates generally climb with housing prices, then the tide turns, and people begin to not be able to afford to buy houses.
Demand decreases, the inventory of houses increases, and prices begin to reduce to the levels where they were before the bubble. In severe cases, these conditions can lead to a housing market crash, when prices are lower than before the bubble occurred. 

What should you do in a housing bubble?

If you own a house during a housing bubble, you could sell your house for considerably more than you paid for it. However, it will almost certainly be more expensive and harder to find a new house. If you go looking for new houses without a plan, you could easily end up having to either downsize or lose the profit you made from your sale.

A housing bubble burst typically happens quickly and without much notice, and you could find the value of your house unacceptably low, possibly lower than the amount you owe on it. Monitoring house values is helpful to know the right time to sell so you can avoid doing so in a housing crash. The effects of a housing bubble burst can continue for some time, and it can be a costly risk to try to wait it out if you have a pressing need to sell your house.

The good news is that cash home buyers like HomeVestors® can almost always help you get money from your house.

HomeVestors® buys houses for cash during housing market crashes, bubbles, and bursts.

Since 1996, HomeVestors has made fair, fast cash offers to sellers whether the market was in their favor or not. It’s why we’ve maintained a reputation as America’s trusted home buyer. Less experienced homebuyers may struggle to overcome any obstacles to your sale that may come up. And online buyers could surprise you with hidden fees at the last minute.

We can close quickly, sometimes in as little as three weeks. We charge absolutely zero commissions and pay typical closing costs, saving you thousands.

Feel confident with one of our Atlanta property specialists guiding you through every step of your sale. Get a free consultation from America’s #1 home buyer with no obligation to accept our offer. You can trust us to get cash in your hands fast. 

Find out more about how we can buy your house fast in Atlanta.