Are we in a real estate bubble and is it about to burst? While prices may come down soon, it won’t be anything like last time.
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Is the real estate bubble about to burst?
The market has been going up and up and up for the last couple of years. As we all know, what goes up must come down.
We haven’t gone down yet, so does that mean there is still room for home prices to increase? I’ll share my thoughts on these questions today.
First of all, there were a number of fundamental factors that caused the market to crash so hard the last time. One of the biggest factors was that there was no documentation for loans. You could tell a lender, “Hey, I make $200,000 a year.” Even though you’re only making $20,000, they would believe you.
That doesn’t happen anymore. Now, you have to prove that you will be able to pay your mortgage in order to get the property.
In the past, there was a whole subsection of loans built on sand. Once the market started to go down, those people couldn’t afford their homes anymore and the market just crashed.
Again, we don’t have that issue anymore.
There might still be room for prices to increase. I believe that we are heading for the crown of the market. Check out the video above to see what I’m talking about.
Basically, as prices go up, we will hit a peak, and prices will begin a downward curve. If we draw a line, it looks like a crown. Prices will start to go down, but there won’t be a dramatic cliff-drop like we saw last time.
If you are thinking of selling, you can lock in those gains now. If you are buying to flip a home, you don’t want to get caught at the peak right before prices go down. If that happens, you could buy something at $400,000 and end up selling at $390,000, which costs you $10,000.
That said, now is still a good time to buy if you plan on living in the home for the next five to seven years or beyond. Even if there is a little price dip in the next two years, it doesn’t really matter because you’re not planning on selling. Plus, by buying now, you will lock in a 30-year fixed cost at a low interest rate.
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Now is still a good time to buy if you plan on living in the home for the next five to seven years.
”If you are thinking of selling your home, I recommend that you get going on that in the next zero to 12 months before home prices start to go down. You can lock in good gains before prices start to go down.
I believe that the market has reached its peak and that we will see a soft landing here. Again, since loans were only given out to qualified buyers, we won’t have a whole subsection of homeowners suddenly unable to pay their mortgage.
I am starting to see buyers resist those listing prices a little this fall. There are still some bidding wars, but if a house isn’t priced correctly and has a little funkiness, it isn’t selling. There is super low inventory, so we might have a little bit of a run-up left before the market peaks. When it goes down, I think it will only go down a little bit.
If you are trying to decide when to enter the market, obviously the best time to do so is when it makes the most sense for you to buy or sell. If you have any questions, please don’t hesitate to reach out to me. I would be happy to help you!