The Housing Bubble is Getting Ready to Implode

The scariest chart in real estate shows an impending correction because you can’t afford to buy a home today.

from My Budget 360

“Definition of economic bubble: A market phenomenon characterized by surges in asset prices to levels significantly above the fundamental value of that asset.” We are definitely in another housing bubble. First, most Americans can’t afford to buy a home without utilizing artificially low interest rates and even then they are stretching their budgets like spandex. Second, home prices are surging in the face of stagnant household incomes. That is the biggest sign of a bubble. The underlying asset in housing is moving up even though incomes are not. So what is driving prices up? Speculation, flipping, investors, and what we would categorize as fickle money. This is the ultimate sign of a housing bubble. Homeownership is near a generational low because most households are living month to month unable to buy. If you want to see the housing bubble in one chart look no further.

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