IS there a real estate bubble?

Published October 2021

Fortune Magazine recently reported that there were 1.7 million homeowners in the mortgage forbearance program,
which allows some borrowers to pause their mortgage payments. The current administration has no plans for another
extension of this program, which is set to lapse on September 30th, 2021.

There are currently just over 600,000 homes for sale on Realtor.com, so even if a small percentage of that 1.7 million decided to sell instead of returning to their monthly payment obligations, would it cause a shock to the real estate market?

We think not, due to the following mitigating factors.

Recent national indicators show that, although housing inventory has dropped substantially over the last year, it has actually been increasing on a monthly basis since May.

With demand still exceeding supply, we should stay in a seller’s market for some time. Home prices are up substantially over the past 2-3 years, and if these forebearance homeowners decide to sell, they should easily recognize a positive equity. This is very different from the Great Recession, when millions of homeowners were forced to sell at prices lower than the mortgage amounts.