Learning From An Oakland Foreclosure Defense Lawyer: What Is A Housing Bubble And What Makes It Pop?

There is a question right now about whether the US is in another housing bubble. COVID-19 has done a number on the real estate market, and it’s hard to determine what is going to happen in the near future.

This is important information to consider when you want to invest in real estate. As any foreclosure defense lawyer will tell you, if you’re planning to buy or sell a home, doing it during a housing bubble will impact the price of any home on the market whether in the Oakland area or anywhere else in the world.

So, what is a housing bubble, and how does it impact the real estate market?

Let’s delve a little deeper into this hot button issue.

What is a Housing Bubble?

A housing bubble is when there is high demand for houses, speculation about the future of the market, and a lot of spending until collapse. They usually start as demand starts to increase and the market is faced with limited supply.

Because there is so much demand and consideration about what’s going to happen, some people will pour a lot of money into the market and drive up the demand even more.

When there is a limited supply of homes, it usually will take some time for the market to replenish itself to meet the demand. A housing bubble is what happens in the time leading up to that point.

If you’re trying to buy or sell a home in the Oakland area during a housing bubble, you’re going to find that there are inflated house prices and, in some cases, unrealistic expectations.

Housing bubbles are always going to be temporary, but that doesn’t mean they can’t last for a long time. For instance, the housing bubble from the early 2000s lasted for over five years. This phenomenon will impact neighborhoods, communities, the economy, residents, and much more.

When Will a Housing Bubble Pop?

Eventually, the demand is going to decrease, or the supply will catch up to the demand, which means the prices of homes suddenly drop. This is when the housing bubble pops.

A housing bubble can also pop because people simply can’t afford to buy any of the homes. This automatically drives the demand down because fewer people are buying.

Lastly, housing bubbles will pop when there is an economic crisis, such as unexpected job losses in a specific region. Less income coming into the home means less income being spent on things like new cars or new homes.

Are There Other Downsides to a Housing Bubble in the Oakland Area?

The main issues that come with a housing bubble are people not being able to afford homes during the bubble, and not being able to pay off homes when the bubble bursts.

Because there is so much speculation about the prices and what is going to happen in the near future, people may borrow a lot more money than their properties are actually worth. When the prices of homes drop, their property values may be much lower than what their mortgage loans suggest.

In turn, this leads to debt, bankruptcy and foreclosure, inaccessible housing, and more.

What Should You Do During a Housing Bubble?

If you’re considering buying or selling in or around Oakland during a housing bubble, the most important thing to do is think about if this is truly the right time to do so.

You may decide to wait until the housing bubble bursts and stabilizes to be sure that you are getting your money’s worth and are making the right investment decisions for your future.

In addition to that, it is a good idea to consult with experts regarding the situation and determine if they have any thoughts on what the best move for you personally would be.

Don’t Let the Bubble Burst on Your Oakland Home

Now that you know what a housing bubble is and are aware of what to do if one is occurring, it’s time to plan ahead.

If you’re thinking about investing in real estate, you need to figure out what you’ll do if the unexpected happens. Dealing with something like foreclosure is extremely taxing, but luckily, we are here to help you if you need it.