As someone with two realtors in my family, my understanding is most people are living beyond their means and don’t actually have the money. But the rates are low and loans are being handed out like hot cakes. People are carelessly and knowingly going into negative equity right now and will have a big wake up call once this market stabilizes, they’re going to be stuck for quite some time. Some of these people are even tapping out their 401k in their 40s just go buy right now. I don’t know if it’s FOMO or what but it makes zero sense to me.
There are those who sold at a higher price and got spring-boarded into a higher priced house but these are the exceptions.
In Australia, we had a royal comission into banking a few years ago, and the outcome was much tighter rules on lending, equity from assets, etc. We also don't allow people to invest in their own or family property from their superannuation (retirement fund). Yet our market has grown and grown, rising 17% or so in the last 12 months and almost 7% this quarter.
Yes we have a very low interest rate currently, however the median wage to house price gap is growing bigger daily. Yet the demand still far outpaces supply.
There are those who sold at a higher price and got spring-boarded into a higher priced house but these are the exceptions.