Is FOMO Fueling Rising Home Prices?


Is FOMO Fueling Rising Home Prices?
By Scott Rogers • April 18, 2022
The Federal Reserve Bank of Dallas indicates that there are signs of a brewing housing bubble... and FOMO (fear of missing out) might be a contributing factor. You'll find the article from the Dallas Fed and some accompanying graphs here... Real-Time Market Monitoring Finds Signs of Brewing U.S. Housing Bubble Some summary points from that article... [1] If lots of home buyers believe current, large, housing price increases will continue, further and stronger buying can be fueled by FOMO - the fear of missing out - which can drive prices up even further. [2] The Dallas Fed calls this phenomenon described above "expectations-driven explosive appreciation" or "exuberance" and it seems to be happening in many housing markets right now. [3] The U.S. housing market has shown signs of exuberance for more than five consecutive quarters. [4] Since the beginning of 2020 there has been a divergence between home prices and rental rates... home prices have been going up much more quickly than rental rates. [5] Much of the data the Dallas Fed analyzed shows signs of "abnormal U.S. housing market behavior" -- which probably is not a surprising descriptor for anyone who has been in the market (buying or selling) over the past few years. [6] Factors contributing to the abnormal market behavior seem to include historically low interest rates, pandemic-related fiscal stimulus programs, Covid-19-related supply-chain disruptions among other factors. So, that was most of the worrisome parts of the article, but this little paragraph towards the end is somewhat of a reassuring finale... "Based on present evidence, there is no expectation that fallout from a housing correction would be comparable to the 2007-09 Global Financial Crisis in terms of magnitude or macroeconomic gravity. Among other things, household balance sheets appear in better shape, and excessive borrowing doesnâ€™t appear to be fueling the housing market boom." So... it's possible that there is a housing bubble (though every local market is different and will behave differently) and if there is a bubble, prices could flatten out or decline, but if they do it doesn't seem likely that it will have the same impact as the 2007-09 housing and financial crisis. Happy Monday!? ;-) P.S. Read the actual article yourself... it has some great additional commentary and context... Real-Time Market Monitoring Finds Signs of Brewing U.S. Housing Bubble Receive Updates by Email Recent Articles: There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell Consider The Cost Of Your Planned Renovations When Planning Your Offer
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 21, 2024 (unless otherwise noted).
Comments (0) or Subscribe