A recent report by CoreLogic revealed that U.S. home values appreciated by more than 37% over the last five years. Some are concerned that this is evidence we may be on the verge of another housing “boom & bust” like the one we experienced from 2006-2008.
Recently, several housing experts weighed in on the subject to alleviate these fears. Sean Becketti, Freddie Mac Chief Economist “The evidence indicates there currently is no house price bubble in the U.S., despite the rapid increase of house prices over the last five years.” Edward Golding, a Senior Fellow at the Urban Institute’s Housing Finance Policy Center “There is not likely to be a national bubble in the way that we saw the first decade of the century.” Christopher Thornberg, Partner at Beacon Economics “There is no direct or indirect sign of any kind of bubble.” Bill McBride, Calculated Risk “I wouldn’t call house prices a bubble.” David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices “Housing is not repeating the bubble period of 2000-2006.” A recent article by Teo Nicolais, a real estate entrepreneur who teaches courses on real estate principles, markets, and finance at Harvard Extension School concluded that the next housing bubble may not occur until 2024. The article, How to Use Real Estate Trends to Predict the Next Housing Bubble, looks at previous peaks in real estate values going all the way back to 1818. Nicolais uses the research of several economists. The article details the four phases of a real estate cycle and what defines each phase. Nicolais concluded his article by saying: “Those who study the financial crisis of 2008 will (we hope) always be weary of the next major crash. If George, Harrison, and Foldvary are right, however, that won’t happen until after the next peak around 2024. Between now and then, aside from the occasional slow down and inevitable market hiccups, the real estate industry is likely to enjoy a long period of expansion.” Bottom Line The reason for the price appreciation we are seeing is an imbalance between supply and demand for housing. This has created a natural increase in values, not a bubble in prices.
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Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market.
Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right. Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions. That hasn’t happened this year. Demand for housing has remained strong as mortgage rates have remained near historic lows. Even with the recent increase in rates, buyers are still able to lock in an affordable monthly payment. Many more buyers are jumping off the fence and into the market to secure a lower rate. The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2017 all fell in April, May, or June. Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months. Bottom Line - If you are planning on selling your home in 2018, let’s get together to evaluate the opportunities in our market. |
Brooke Harrisis a full time Realtor/Dog Mom that loves the outdoors and helping people find their dream homes! Archives
March 2020
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