The Sky is NOT falling, and the bubble is not going to pop.
I have seen so much doom and gloom in the Real Estate world, and a lot of it is in the Mainstream Media.. Nothing sells better than a negative headline, and unfortunately news is a business that sells advertising.
So, are housing prices falling as some have said? I don't see it. We are seeing price reductions on listings, but that is because they were priced wrong to start with, not because there are not buyers out there willing to pay market price.
Inventory is up, so prices must be going down.. Ummmm, again- look at the data yourself. Yes we have more inventory.. but it was at abysmal levels and arguably still is. Take a look at this graph of inventory for single family homes:
This is as far back as inventory data goes, but I think 40yrs is plenty of data to chew on and make a decision. We were under 1 million units earlier this year while the average has been more than double that number. When you dig deeper it is even worse. Historically 25% of the Units for sale number is under contract, so technically not available. The past year or more the under contract number has been at least 40%, meaning that 1 million unit number was really 600k available. Now look at that peak in inventory.. Remember what happened in 2008? Supply outpaced demand. We had too much inventory and not enough people to buy it. That is what popped the bubble, if you dig into the chart below you can see a leveling off and slight dip in households that caused the pop.
Now lets look at potential buyers, which are basically Households:
In 1982 there were about 83 Million households in the country and about 2.2 Million listings available
We started 2022 with over 127 Million households and have been averaging just over 1 million "available" single family homes for sale.
Supply and demand drive just about everything in the economic world. All of these households need a place to sleep at night. That is why rents have continued to climb, up 0.8% last month alone. One report from Realtor.com is showing rental growth slowed to a 16month low at 7.8% year over year growth.. again... not really slow- it is still more than double the rental growth we saw in early 2020.
This is why investors have been a large portion of the market the past few years. You are pretty much guaranteed to find a tenant for your rental, at top dollar.
Mortgage rates have climbed, but remember the mortgage is temporary. Here is a real life example of my first house. I purchased it in 1989 and had a 30yr fixed rate at 11.25%, I refinanced it twice in the early 90's. First to 9.25 on a 5yr Balloon mortgage because fixed rates were still double digit, and again to another 5yr Balloon at 7.25... all three loans higher than most rates we are seeing today. If you can afford the payment, AND you plan to keep the home for the long run, it is still a good time to buy a house and there is also a little less competition because many buyers do not read past the headlines and are afraid of rates. You can buy the house today, begin to build YOUR equity, and refinance it in a year or two as rates settle back down. Prices are not going to go up 20% next year, that is certain but forecasts are all showing respectable gains, and even tiny gains are better than paying a landlords mortgage.
Bottom line: the cup isn't half empty, it is still overflowing with buyers.
If you need a Mortgage or an Equity loan, We can help- Everywhere but UT, Give me a call.
Robert Rauf
Mortgage Loan Originator NMLS# 248937
http://www.homebridge.com/RobertRauf
or my blog: http://activerain.com/blogs/rrauf
Office: (732)908-4868 Cell (732)740-0175
RRauf@HomeBridge.com
www.RobertRauf.com
Since 1987 I have been helping my clients fulfill their dream of home ownership! HomeBridge Financial Services, Formerly REMN, HomeBridge Financial Services is located at 9 Grand Ave, Building 2 Suite A Toms River, NJ 08753. NMLS #6521. New Jersey Licensed Lender and Mortgage Banker #L041053. Visit www.Homebridge.com or www.RobertRauf.com for more information. NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey, Toms River NJ 08753, Toms River NJ 08755, Brick NJ 08723, Brick NJ 08724 Mortgage in Ocean County NJ, Mortgage in Monmouth County NJ, Jackson NJ 08527, Howell NJ 07731, Lacey 08731 08734, Beachwood 08722 Bayville 08721,
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