Monday, 30 September 2013

Market bubble?

Home prices have been rising rapidly, so much so that there is talk that we are entering another national bubble. Is it possible that we are lapsing into a bubble mentality, a self-reinforcing cycle of popular belief that prices can only go higher?

People who are now inclined to buy a home are most often just thinking that we are gradually recovering from a recession and that this is a good time to buy. The mental framing still seems to be about economic recovery and the likelihood that interest rates will rise. People mostly don’t seem to be prompted by the anticipation of another housing boom.

That is the thinking at the moment. But whether these attitudes mutate into a national epidemic of bubble thinking, one big enough to outweigh higher mortgage rates, fiscal austerity and other factors remains to be seen.

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