Is There a Housing Bubble?

The higher home prices soar, the more frequently this question is asked. Is there a housing bubble looming, and might prices come crashing down as they did 10 years ago?

In California real estate there is always a chance of significant movement in home values. Typically the upward swings outweigh any downward trends, but average value reductions have occurred in the past, most significantly between 2008 and 2011.

Of course, it has not been that long for most of us, and we also remember how prices rose so high, rising over 150% between 1997 and 2006, and on the coattails of unregulated lending, where many buyers were purchasing homes that they could not afford in the long run. Fast forward to today: the median home value in 92011 is $1,049,000, representing a healthy 45% increase since 2012. This increase has been much more steady from year to year and is also fueled by regulated loans for buyers who must show that they truly have the income to support the mortgage payment.

It is for these reasons that most experts I consult with feel that a “flattening” or mild correction may be coming in the near future, but nothing significant. Are we near the end of a good run in appreciation? I believe we are near the top.

There are a few indicators worth watching. One such indicator is new construction permits across the county. In the first quarter of 2015 we saw 2,541 permits pulled, 2,223 in 2016, and in the first three months of 2017, permits have dropped to 1,409. Clearly, the builders feel we are nearing a plateau as growth has also curtailed.

So, we remain within a strong seller’s market, and should remain into the fall. If you need any specific information on your home or neighborhood, send me an email or give me a call.

rew_berkshireAl Rex
Realtor • CalBRE# 01377312
7030 Avenida Encinas, Suite 100, Carlsbad, CA 92011

Al Rex has been a top selling realtor in Carlsbad for the past 14 years, where he and his family reside. Visit his website at to get updated MLS information, or to find a floor plan for your own home.