Today I want to take a look at the top three myths about our current real estate market:
1. We are headed toward another housing bubble. Home prices have appreciated year-over-year for the past seventy-six straight months. We are near the peak prices that we saw before the bubble burst previously and many people are worried it will happen again. The reality is, though, that there is a lack of homes for sale and a strong demand for them.
Historically, a normal market requires six months of inventory for prices to rise with the rate of inflation. Currently, there is only 4.3 months of inventory available, which means that there is still upward pressure on pricing, especially in lower price points. If we see a downturn in the economy with weakening demand, the market will normalize and price gains will be in line with inflation.
2. The rumored recession will lead to another housing market crash. Economists and analysts know that there has been economic growth for nearly a decade, making this the second largest expansion in America’s history. They also know that when this happens, a recession can’t be too far off.
A recession is generally identified by a fall in the GDP for two consecutive quarters and does not equal a housing crisis. However, many people group them together because the last time there was a recession it caused the housing crisis. According the the Federal Reserve, home values appreciated after five of the last six recessions.
3. There is an affordability crisis. The monthly cost of a home is determined by the price that is paid and the interest rate of the mortgage. Even with the current interest rate of 4.59%, according to Zillow, the percentage of median income necessary to buy a home in today’s market is much lower than previously seen. Today’s average of 17.1% is lower than 1985 to 2000’s 21% and lower still than 2006’s 25.4%. Interest rates would have to increase to 6% before buying a home would be less affordable than historic norms.
If you are in the market to buy or sell and would like to sit down and discuss your unique situation please feel free to contact me at 760-565-5714. I look forward to speaking with you soon.
This Blog courtesy of Will Cook,Will Cook Group, Keller Williams Luxury Homes, Palm Springs, CA |DRE # 01879277
The information being provided by SoCalMLS, CRISNet Regional MLS, CARETS is for the consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumer may be interested in purchasing. Any information relating to real estate for sale referenced on this web site comes from the Internet Data Exchange (IDX) program of the SoCalMLS, CRISNet Regional MLS, CARETS. ZipRealty, Inc. is not a Multiple Listing Service (MLS), nor does it offer MLS
access. This website is a service of ZipRealty, Inc., a broker participant of SoCalMLS, CRISNet Regional MLS, CARETS. This web site may reference real estate listing(s) held by a brokerage firm other than the broker and/or agent who owns this web site.
The accuracy of all information, regardless of source, including but not limited to open house information, square footages and lot sizes, is deemed reliable but not guaranteed and should be personally verified through personal inspection by and/or with the appropriate professionals. The data contained herein is copyrighted by SoCalMLS, CRISNet Regional MLS, CARETS and is protected by all applicable copyright laws. Any unauthorized dissemination of this information is in violation of copyright laws and is strictly prohibited.
Copyright 2019 SoCalMLS, CRISNet Regional MLS, CARETS. All rights reserved. Certain information contained herein is derived from information which is the licensed property of, and copyrighted by, SoCalMLS Inc
Data last updated: February 17, 2019 5:35 AM.
If a listing displays "Short Sale/Subject to Lender Approval" then that listing has been identified by the seller and the listing broker as a "Short sale." This means that, at the listed price, the proceeds from the sale may not be adequate to pay all liens and costs of sale. Any offer made that does not fully cover the existing amount(s) owed to the lienholder(s) plus the costs of sale could be subject to lienholder approval, which approval may be exercised at the sole and exclusive discretion of the lienholder(s).