Economists say the pandemic housing boom is showing 'signs of exuberance' akin to the boom of the early 2000s.
, or risk getting left out of the real estate market. Those dynamics have caused some observers to question whether the U.S. is repeating the housing bubble of the early 2000s, which led to a painful housing crash in 2006 and the Great Recession the following year. the Federal Reserve Bank of Dallas, is that the market is showing"signs of a brewing U.S. housing bubble."
"But real house prices can diverge from market fundamentals when there is widespread belief that today's robust price increases will continue," they noted."If many buyers share this belief, purchases arising from a 'fear of missing out' can drive up prices and heighten expectations of strong house-price gains."
Third, the analysts examined the ratio of home prices to disposable income, another measure of housing affordability. This hasn't risen to the level of exuberance, but the economists noted that household disposable income was buoyed during the pandemic by stimulus checks as well as a decrease in household spending due to lockdowns — transitory factors, in other words.
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