Are We In A Housing Bubble In The Greater Palm Springs Area
Dated: June 11 2021
The numbers indicate we’re not in a housing bubble.
Are we in a housing bubble? Is the market going to crash?
This seems to be something I’m getting asked about a lot these days. While I don’t have a crystal ball and can’t definitively answer these questions, I can share some information that would indicate we’re not in a housing bubble.
The first key to remember is that the last market crash from 2005 to 2008 was built on predatory lending. Lending standards were very loose back then. However, with the passing of the Dodd-Frank Act and the new regulations formed by the Department of Housing and Urban Development, it’s much more difficult to get a loan. Lenders nowadays check your down payment, debt-to-income ratio, and have very strict standards for giving loans.
Second, due to our high job loss caused by the pandemic, the government created forbearance programs that allowed homeowners to defer or delay their mortgage payments for a certain amount of time. As they begin to make those payments again, many lenders are allowing modifications to their mortgages, which allows them to put their payments on the back end of them. This has prevented outright foreclosures from happening; the number of foreclosures in our area is very low.
Third, home prices have appreciated by 21% in the past year in the Palm Springs area, which gives a lot of homeowners additional equity in their homes. If they find themselves in a difficult place, they’d be able to get out of their homes and cover their closing costs quite easily.
Lastly, new housing starts are at a 10-year low. Builders haven’t been building at the same pace that they did during the runup to the last crash. We have a housing shortage issue that’s creating more appreciation for sellers. As long as interest rates stay low and wage growth continues, it’ll create affordability even though homes are appreciating. Over the next year, we’re projecting homes to keep appreciating at a rate of 6% to 7%.
If you’re interested in purchasing a house, now might be the time to act so that you don’t have to pay that additional 6% to 7% in the next year. If you have any questions about selling a home or purchasing in this market, don’t hesitate to call or email me. If you have any other real estate-related questions, feel free to reach out to me as well. I’d be happy to help you. I’ll see you next time!
This Blog courtesy of Will Cook, WILL COOK GROUP | Keller Williams Luxury Homes, Palm Springs, CA | DRE #01879277
Ranked in the top 1% of all agents valley wide and named one of the Palm Springs Life Top Realtors for 2019, 2020, and 2021; Will is an Associate Broker/Team Leader of the WILL COOK GROUP with Keller ....
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