Given current interest rates, pricing, and inventory, is a bubble on its way?
Before answering this, let’s define what a “bubble” is. A housing bubble refers to a period of rapid, unsustainable growth in the market. What happens after this growth is an equally rapid decline, very much like the bursting of a physical bubble. When a bubble bursts, fragments go everywhere.
Certain housing corrections and cycles are normal, but bubbles are not. So it’s important to know the difference between them. The Charlotte market is growing at an exponential rate, so even if the market “cools down”, home values will continue to rise based on the supply and demand of the area.
Based on this, we aren’t likely to see a bubble on the horizon.
Interest rates are going up, but does that mean that home prices are going to go down? Actually, there is no relation between interest rates and house prices. There have been four times in history when interest rates have gone up over a half percent. And each of these times, prices continued to rise. This is likely because when interest rates go up, there are usually higher wages and higher employment, meaning people are able to afford increased expenses.
In Charlotte, we have just about 18 days supply of inventory. So if you’re a buyer and you come across the right home, you need to make your move, and because of this short supply, home prices continue to rise in the area and multiple offers are abundant.
If you have any additional questions regarding the current market, please contact us. We would be happy to assist in any way.
