Are you watching the Real Estate Market? Does it feel a lot like '08? Are we in for another "Crash"?
Every market is different than the next. A lot of factors play into any of the assumptions that would indicate a type of "bubble" if you will. Rates are rising, home prices are at all time highs, and buyers are getting fatigued just trying to get something under contract.
The difference between this market and '08 is the SUPPLY. Since the crash of '08 new construction has lagged behind drastically for growth options within the inventory. At the peek of the hottest market our new construction across the nation was around 575,000 homes built in a single year (fall '06). Since '08 we plummeted to 275,000-300,000 new homes on average per year. Leaving us at 300,000 homes short per year for the last 14 years. With this factor alone a true "Crash" will likely not come but rather a leveling of the market.
With limited new inventory in terms of new construction coming available on a national scale we are feeling the surge over the past 3 years with exponential growth among transactions but also amongst valuation of properties. This allows many buyer's the possibility to cash in on equity and move up in a very quick time frame.
On the flip side in order to slow the growth of real estate and off set everything we now need to worry about inflation. When qualifying for a home this is not taken into account. You are still given a budget that is based off of older percentages as we have not experienced inflation to this degree since the early 80's. What does this mean?
If you were to buy a home at the top of your given budget your lender is not using new numbers to arrive at said budget. Inflation can ultimately push you out of the home you just purchased as the costs of everything else is going up. "But I locked in a great rate!" This is true and an amazing way to hedge inflation for your largest expense. Remember where I said the top of your given budget. If you stretched to get everything you wanted in a property but now have a 10-20% increase on most of your common supplies to survive you are now left with the choice to re-budget, sacrifice, or sell your home in order not to be financially strapped. Thus leading the aspect of a "bubble" or "crash" due to potential of foreclosure.
Best advice is purchase your next home but don't push your budget! Invest in yourself and future with the current fixed rates but always leave a form of security in the facts of utilization of your budget!
https://www.marshallteamsells.com/
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