Housing Bubble?

There has been talk about a housing bubble and its possible burst. Why don’t I think it’s going to be the same as the early 2000’s? Here is why:

Back in the early 2000’s, rates were decent but not as low as they have been in 2020-22. People were banking on rates dropping and being able to refinance to a lower rate, hence, there were a lot of adjustable rate mortgages (ARMs) issued and rates didn’t drop like people anticipated they would. So when all of those ARMs came to their adjustment term, people found they were unable to pay their mortgage. Then the foreclosures and all of the things that came next.

Now, we have a different issue. Rates were super low in 2020-22 and therefore, people locked in at super low historic rates. So now, no one in an existing home wants to move or trade up (unless they have to) because their rates are so low and prices remain on the high side. Instead of a crash, I believe we will have an extended period of time of lack of inventory. People are adjusting their minds to the “higher” rates of today, but there will be a struggle to meet the market demands for homes for sale.