In case you haven’t heard, home prices are continuing to rise. This may make some people wonder whether or not we have another housing bubble getting ready to occur.
Major industry member recently reported that nationally, home values are higher then the peak prices that were reached during the housing bubble. They also stated that these housing prices are at their highest value in more than 10 years. And that statement is correct.
However one must realize that just because the housing prices have caught up to the prices of a decade ago this does not mean we are in a housing bubble. During the housing bubble home prices rose precipitously. And then they crashed. However, if you take the prices that were in effect at the beginning of the bubble and you erased the very steep rise in prices and then took out the factor of the steep decline in prices, and then added in just the normal appreciation, we are now exactly at the level where they should be. So I don’t think that we have a bubble here.