What’s going on? I held an open house and only two groups came through! I listed a property and I’ve only had three showings! Is the real estate bubble bursting?
Don’t wait for a popping sound, but the market is softening somewhat. Prices around the country in many areas have adjusted downward by an average of 5% and bidding wars are starting to slow as rising mortgage interest rates have increased to 5% or more. Realtor.com reported last month that home prices are moving south in Toledo, OH, Rochester, NY, Detroit, MI, Pittsburgh, PA, Springfield, MA, Tulsa, OK, LA, CA, Memphis, TN, Chicago, IL and Richmond, VA. Trust me, this isn’t any repeat of the evil Great Recession when housing prices were out of control and within a year the bubble burst and prices plummeted across the country, with many foreclosures a direct result. This small of a decrease doesn’t mean we’re headed for another crash and Utah sellers won’t feel that much pain during this inflation. Why?
- We’ve got the best unemployment stats in the country with only 2% of Utahns without jobs, whereas the national rate is more like 3.6%.
- More people are moving to Utah than leaving.
- We still have very low real estate inventory for buyers to buy or renters to rent in the State.
The advantage now with the market softening is that buyers may actually have a chance at winning a bid rather than competing with 20 or more offers. Maybe now there might only be a handful of offers.
During the crash in 2008 we saw housing values decline almost 20% and yet in 2021 housing prices rose on average of 19% in one year. With the Coronavirus Housing Boom of renters wanting the security of owning their own nest and Millennials deciding to buy rather than rent we saw not just unholy increases in offering prices by homeowners but super low inventory. As our inflation keeps growing experts believe recession will follow, and when that happens, we usually see a collapsing housing market. That isn’t logical when there continues to be such a demand on housing inventory. Thus, don’t pee yourself to think the home you just bought is going to go down in value by 20% anytime soon.
Back in 2008 just about anyone could get a home loan and too many bought that really couldn’t afford to own and so when the economy crashed buyers lost jobs and couldn’t afford their mortgage payments which led to massive foreclosures around the country. Nowadays lenders are much tougher on buyers who now have to meet much more rigid credit and income requirements to qualify for a mortgage. There are very few foreclosures out there right now as seen by the HUD website’s list of available homes.
Don’t panic if you’re selling right now. You may be longer on the market, may need a price adjustment, but you will sell if you’re patient and have a good sales strategy.