A big question on a lot of people's minds is whether or not we are in a housing bubble. Are prices artificially high, and with a sudden change, will the bottom drop out and suddenly we are left with decreasing prices, houses falling into foreclosure, and the market shifting to a buyer market? The attached article gives three reasons why we are not in a housing bubble. I am certainly not an expert, but I will give my two cents worth. I think we will probably see a slow down of the number of sales. This is driven more by the fact that there just are not enough houses on the market to satisfy all of the buyers we have. We currently have only just over a month's worth of inventory on the market. That means that if no more listings were taken starting today, we would only have enough houses to sell to current buyers on the market for about 1.4 months. That is a Sellers' market. If you only have 12 bananas, you can only sell 12 bananas. You might be able to charge more for them. So why not inflate the price? Current regulations on the mortgage industry have made the appraisal process more strict. If anything, we are seeing more appraisals coming in below the contract price. So the appraisal process is keeping in check the over exaggerated prices of homes that we had seen just after the turn of the century (boy, doesn't that sound weird). Is it perfect? No. But it certainly is a check and balance to ensure that the prices are tracking more evenly with what the values of property are, and preventing over inflated prices to a measurable degree. So what does this mean. It means that Sellers have a great opportunity to sell their house. Better than years past. Buyers are in a bit of a pickle, because the inventory will limit their choices, and their bargaining power. That may mean it takes a bit longer to find your house, so plan on starting your search earlier. And at the risk of sounding self serving, using a Buyer's agent is a good idea, because they will have their finger on the pulse of market prices in an area, and can help you get the best price. There are also a lot of multiple offer situations, and an agent can advise you on how to make your offer more competitive than the other, and thus make it the stand out to the Seller. So what are your thoughts? Are we in a bubble? Are we looking at a decline coming up? Let me know what you think in the comments.
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