Are We in a Housing Bubble?

As the pandemic shifts housing priorities and costs continue to soar, experts assess the potential for a crash similar to 2008's Great Recession.

2 minute read

June 16, 2021, 9:00 AM PDT

By Diana Ionescu @aworkoffiction


House

divanov / Shutterstock

With home prices and rents rising across the country, Jerusalem Demsas, writing for Vox, attempts to answer the question, "are we in a housing bubble?"

"[T]here’s no agreed-upon economic definition for an asset bubble," writes Demsas. "And in everyday conversation, it appears to mean 'prices have gone up a lot and I think they’re going to come crashing down again.'" Regardless of the label, Demsas argues that home prices depend "on public policy choices that are in our control."

According to research by Harvard economist Robin Greenwood and his fellow researchers, "just because prices rise really fast doesn’t mean it’s a bubble in danger of popping. The definition needs to be narrower than that." A "frenzied ethos" is also a key component. "In general, what people are looking for to determine if there might be a bubble in housing is that the fast price appreciation is detached in at least some ways from the fundamental reasons why prices increase or decrease normally (like supply or demand)." 

Regardless of the bubble status of today's housing market, homeowners and buyers, overall, face less risk than before the 2008 crash. "This isn’t a situation where a ton of people have mortgages that they won’t be able to pay off — the marginal homebuyer is wealthier and more secure than in the lead-up to the Great Recession." But "[p]rices are rising, homeownership is increasingly out of the reach of many Americans, and the alternative (renting) is also increasingly expensive, especially in the most job-rich parts of the country. This is an unhealthy, unstable, and unacceptable state of affairs." Demsas blames restrictive zoning laws for "turning an asset that could be widely available into a scarce one" and suggests that local governments should encourage increased density and more housing production to help supply meet rising demand.

Monday, June 7, 2021 in Vox

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Aerial view of town of Wailuku in Maui, Hawaii with mountains in background against cloudy sunset sky.

Maui's Vacation Rental Debate Turns Ugly

Verbal attacks, misinformation campaigns and fistfights plague a high-stakes debate to convert thousands of vacation rentals into long-term housing.

July 1, 2025 - Honolulu Civil Beat

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 2, 2025 - Diana Ionescu

White and purple sign for Slow Street in San Francisco, California with people crossing crosswalk.

San Francisco Suspends Traffic Calming Amidst Record Deaths

Citing “a challenging fiscal landscape,” the city will cease the program on the heels of 42 traffic deaths, including 24 pedestrians.

July 1, 2025 - KQED

Google street view of wide street in Cleveland, Ohio with blue 55th Street sign and red brick three-story building visible in right corner.

Cleveland to Boost Bike Safety With New Bike Lanes, School Programs

The program, using curriculum created by Cleveland Bikes, is part of a broader effort to improve safety along school routes.

45 minutes ago - Signal Cleveland

Aerial view of heavily damaged mobile homes after a hurricane in Florida.

Florida Home Insurers Disproportionately Dropping Low-Income Households

Non-renewal rates are highest in inland counties, not the coastal areas most immediately vulnerable to storms.

1 hour ago - Inside Climate News

"Altadena - Not For Sale" yard sign in front of burned down house after Eaton Fire in Altadena, California in January 2025.

Half of Post-Fire Altadena Home Sales Were to Corporations

Large investors are quietly buying up dozens of properties in Altadena, California, where a devastating wildfire destroyed more than 6,000 homes in January.

July 7 - Dwell

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.

Associate/Senior Planner

Gallatin County Department of Planning & Community Development

Senior Planner

Heyer Gruel & Associates PA