As home values continue to rise, some are questioning whether we are approaching another housing bubble.Ā ZillowĀ justĀ reportedĀ that:

ā€œNational home values have surpassed the peak hit during the housing bubble and are at their highest value in more than a decade.ā€

Though that statement is correct, we must realize that just catching prices of a decade ago does not mean we are at bubble numbers. Here is a graph of median prices as reported by theĀ National Association of RealtorsĀ (NAR).

Are Home Prices Approaching Bubble Territory? | MyKCM

We can see that prices rose during the early 2000s, fell during the crash and have risen since 2013.

However, letā€™s assume there was no housing bubble and crash and that home prices appreciated at normal historic levels (3.6% annually) over the last ten years.

Here is a graph comparing actual price appreciation (tan bars) with what prices would have been with normal appreciation (blue bars).

Are Home Prices Approaching Bubble Territory? | MyKCM

Bottom Line

As we can see, had there not been a boom and bust, home values would essentially be where they are right now.

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