Home values are soaring. Mortgage rates are zig-zagging. And the housing market has taken center stage in the U.S. economy.

Sarah Pierce, head of operations at mortgage company Better.com, and Megan Bellingham, Better.com’s head of mortgage, say home prices are unlikely to crash — and refinancing your mortgage still might be a good call.

They spoke to Bankrate.com about the housing economy.

Are we in a real estate bubble?

Pierce: We’re always concerned we’re in a bubble. However, this current boom in home values is really due to an unprecedented housing shortage. Millennials are entering into an age where they’re going to buy. It used to be the prime buying ages were 29 to 31. Now it’s 31 to 35. It’s taking millennials longer to save up for homeownership. There’s a whole generation that delayed their homeownership by five years. Plus, people are living longer and staying in their homes. Building hasn’t kept pace with the demand.

It’s different than a bubble, where you have price inflation. This is more of a classic supply-and-demand problem. Even as people return to work at a lot of companies, are companies really going to pay for prime real estate in Manhattan? I think the in-home office is definitely here to stay, so people are going to need more space.

Mortgage rates remain historically low, but they’re up from a few months ago. Is the refi boom over?

Pierce: Question of the hour. I don’t think it’s over. We saw a lot of refinancing during the pandemic because people were at home and they thought, “I might as well refinance because I’m at home right now.” The refi boom will change and it will transition. It’s always a strong refi market. Homes have appreciated in value an average of 12 percent over the past year, so people have a lot more equity.

One of the big misperceptions is that refinancing is only to lower your rate. Even though rates have come up, they’re still at historic lows. It’s still a really good time to consolidate debt, to cash out or to buy a home.

Will the pandemic create lasting changes in the way Americans buy and sell homes and apply for mortgages?

Pierce: We saw on the purchase side customers become much more comfortable with doing things digitally – buying homes sight-unseen, and just generally being willing to buy a home without setting foot inside it. It will be really interesting after the pandemic to see if that changes.

Bellingham: Our headquarters are in New York, and we saw a ton of buyers who were leaving the city. This type of environment of not really being able to do everything in person has pushed the industry to do things differently.

Appraisal waivers are one example. There’s a shortage of appraisers. There’s an increase in cycle times, which increases the cost of getting the appraisal done. If we can get more creative about leveraging some of these automated valuation models, it will start to drive down the costs for consumers. All the associated costs are ripe for digitization – that includes mortgage companies, title fees and real estate agents.

Pierce: It’s still this big hairy, scary transaction. Customers still want to talk to somebody on the phone. The Realtor does provide this service where they’re offering guidance. They really can help guide people into homeownership. But what I really think is ripe for disruption is the way agents are paid. We want to align all of our people with the consumer. We believe that if you’re getting a commission, you’re not really aligned with the consumers.

What do you see happening to mortgage rates this year?

Pierce: We have two working theories: One is that people will get vaccinated, things will start to reopen and the economy will boom, and rates will go up. The other potential path is that we’re seeing kind of an artificial boom from the stimulus, and once that boom ends, rates could come back down. But it’s anybody’s guess.

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