Despite rising home prices, this isn’t 2005 again

Bubbles are great to have in champagne, baths and a host of other things, but they are not good for the real estate market. A real estate bubble is generally caused by unjustified speculation in the housing market that leads to a rapid and unsustainable increase in prices. When the real estate bubble bursts, prices decline quickly — often to levels lower than when the surge in prices started. There is no doubt that home prices have risen significantly in the Washington area over the past several years, and affordability, especially for first-time home buyers, is a real concern. In such an expensive region of the country, many Washington-area residents are wondering if we’re in a bubble right now. The short answer is no.

Source: The Washington Post


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