With the COVID-19 pandemic creating a demand for homes across the country, housing prices are on the rise.
The median price for a single-family home increased to more than $313,000 between July and September, a figure that's increased 12% in the last year.
According to Danielle Hale, the Chief Economist at Realtor.com, housing prices increase when there are a large number of buyers and not a lot of homes for sale.
"With the pandemic, we've actually seen these trends be exacerbated," Hale said. "We have even more buyers in the market, as people are looking for more space and possibly to get out of crowded apartments and into a single-family home where they've got a yard and some outdoor space and room to live and work and play all at home."
Hale says prices are up because there aren't enough new homes under construction — a possible overcorrection from the housing market crash 12 years ago when there was more construction than was needed, and the loan market went without the regulation in place today.
Hale says that home prices are now rising in a way that could eventually impact affordability.
"Home prices are rising, but this pace of increase may not be sustainable, especially if mortgage rates steady or start to rise," she said. "The important thing to think about is that regardless of the macro-economic context, you want to look at your personal financial situation."
Experts say the best way to become immune to a housing bubble is for buyers to make sure their financial situation can handle monthly mortgage payments long-term, even in the event of job loss.
