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Home » Looking into My Crystal Ball…

Looking into My Crystal Ball…

July 1, 2021

School’s Out – But Does it Matter?

Looking into My Crystal Ball…

These days, the most Googled question in residential real estate is one variation or another of, “Is this a bubble?” (By the way – that question surfaces 2,450% more than the next most Googled!) It is clear folks are concerned that 2007 will repeat itself. Spoiler alert: it will not.

I don’t pretend to be a great prognosticator, but I do my best to follow the most reliable sources for real estate and market intel. The good news is that experts predict the housing market won’t implode like it did back then. Yesterday I watched an interview with Lawrence Yun, Chief Economist and Senior Vice President of Research at the National Association of Realtors. Mr. Yun is a pretty smart guy – and here are three takeaways from the interview:

  1. Right now, there are 1.2 million homes for sale. Back when the bubble burst, there were more than four times as many homes on the market.
  2. This is a completely different lending climate. The shady, risky mortgages that were the norm during the last boom are long gone.
  3. The equity that most Americans have in their homes is very healthy and continues to increase with home prices – which means there are no foreclosures on the horizon.

Another key dynamic at work is that Core Inflation is rising at the highest pace in 30 years! Rental prices are anticipated to continue to rise (next year we can expect to see an increase of 4 to 7%.) Compare that to the cost of owning with the lowest interest rates ever – a fixed payment that will keep your housing costs down for the next 30 years in a sea of inflation.

More new homes are being built and this will help with the current inventory shortage, but there are loads of buyers waiting in the wings. If inventory does rise and prices start to soften, these buyers will be ready to jump into the market.

Healthy home equity, rising inflation, less inventory, fixed rates? According to my crystal ball, there’s no bubble on the horizon.

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