When the economy soured, we witnessed the results / ramifications in the apparent subsequent (2006) housing bubble. The run up, witnessed significant increases in real estate costs and then some of the ramifications, when it soured, including many foreclosures, etc., and the impact on prices! In recent months, we have witnessed a significant increase in house prices, at a historic rate! Will this trend continue, slow down, stop, or will there be another bubble? After more than 15 years, as a licensed real estate seller, in upstate New York, I have seen markets large and small and, I firmly believe, there are no guarantees when it comes to this! With that in mind, this article will briefly attempt to consider, examine, review, and discuss, 3 possibilities, when it comes to this.
1. No: Perhaps the most studied economic theory / reality is known as the Law of Supply and Demand. As inventory remains low and qualified potential buyers outnumber homes on the market, prices will continue to rise. Will they do it at the same rate? Nobody knows for sure? Will prices come, falling, soon? My professional opinion is that the main factor is the perception of the buyer, as well as the greed of the seller! As long as there is buyer interest, and enough buyers, who can afford to buy a home (or, believe it, yes), there won’t be a bubble! It seems that we will be experiencing a period of inflation, in the not so distant future, and that will continue, supporting the rise in prices, etc.
2. Yes: We have experienced historically low interest rates for a few years now! This has created mortgage rates, which are so attractive and have the impact of creating a perception of more benefits for the money, especially when it comes to affordable monthly payments (since the vast majority of homes – buyers, use mortgages) . How long will rates stay low, especially in terms of fears of inflationary pressures, etc.? What impact will other economic conditions / job uncertainties, etc. have? When will more homeowners decide to sell, in order to profit, from today’s prices, and will it create a significant increase in inventory, etc., and transform it from a Sellers to Buyers market, etc.?
3. A mix / somewhere in between: Perhaps the most likely outcome will eventually create a market, which is somewhere in the middle. A more balanced market and, a much slower rate of price increases, will probably become the normal of tomorrow!
Watch out, no trend, it seems to last, forever! Homebuyers should buy what they can afford, that meets their needs, etc., and perceive, as fair and equitable, as well as comprehensive, the best way to view one’s family’s home is, as a measure! long-term!