Home values in the Lansing area have risen by more than 12% over the past year.
This means, a home that sold for $250,000 a year ago would likely sell for $280,500 today.

This rapid rise in prices has many buyers and homeowners wondering if the housing market is becoming overvalued.

Is there a housing crash on the horizon?
This is not the first time the real estate market was considered to be overvalued. Home values escalated in 2002 through 2006, just before the nationwide housing market collapse.

Things are different in today’s market. During the last housing bubble, there was a huge surge in new home construction and extremely lax mortgage-lending standards.

In the current market, there an ongoing shortage of homes for sale across the mid-Michigan area. Instead of having too many houses on the market, we currently have a situation where the number of available properties falls well below the demand. This is the number-one reason why prices have risen so sharply over the past year or two.

Even though buyers continue to pay above asking price, that does not necessarily mean a crash is on the way. The ongoing problem with supply and demand will continue to force home values upward in the foreseeable future.

If real estate home values continue to climb, there could eventually be a decline in home sales due to many buyers being priced out of the market.  In addition, buyers may reconsider purchasing a home. Buyers worry that they will overpay for a home, only to see prices drop over the next few years. This can lead to a homeowner being “upside down” or underwater in the mortgage loan.

No one can predict future real estate or economic trends with complete accuracy.  So, home buyers simply have to think long term, when buying a home. Houses tend to gain value over the long term. That is what makes real estate one of the best investments over time.