Here is the Thurston County WA real estate market update for June 2015.
Is this positive trend sustainable?
With all the good real estate news, I’m frequently asked whether this run is sustainable. While I wish I could predict the future, what I can say is there are fundamental differences between this current trend and the last run-up that resulted in an unprecedented downturn.
FIRST—lenders are not giving loans to unqualified buyers. The last upward trend had loans given to people who could not afford them. That led to an artificial boost in demand, which blasted the market to unsustainable heights. Today, lenders are required to confirm information about a buyer’s ability to repay a loan—obviously a welcomed return to common sense.
SECOND—large national builders rushed into the market to meet the bloated demand. By the time all the new lots and homes came to market, the problems with poor lending came to light. That left a lot of property for sale and very few buyers. This was the recipe for the crash. Today, builders are nowhere near the pace of creating new communities. That keeps supply in better balance to real demand.
THIRD—price gains this time have been more in line with reasonable historic patterns. From 2004-2006, gains were 12%, 21% and 12% respectively. This was not sustainable. Historic gains are 5.9%. We are now back to that healthier trend.
The big increase in demand today is the result of many homebuyers waiting on the sidelines for years while the market bottomed out and confidence in the greater economy returned. Even with the current record pace of sales, we expect the pent-up demand to take another few years to fully unleash. After that, we hope to be back to our consistent upward trend.
No Housing Bubble Prediction You may hear many people talking about another housing bubble on the horizon with this heated marketplace. In addition to the reasons listed above, other factors will keep the bubble in check:
- A price crash is hard to happen with such low inventory levels.
- Higher interest rates will take some heat out of the market.
- Reasonable rise in home prices instead of the spike in prices as in the past.
If you are considering making a move this year, call me today!
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Statistics not compiled or published by the Northwest Multiple Listing Service. Statistics compiled by Francine Viola from NWMLS data.
Originally posted and written by Francine Viola at her blog site, www.InTuneRealEstate.com where you can learn more about the real estate market and get tips and advice for a smooth real estate transaction!