It keeps popping up.   Are we in a housing bubble and is it about to burst?

Hi everybody,  It’s Joe Hillner with Your Home Sold Guaranteed Realty, where we guarantee that your home will sell for 101% of asking price, or I'll pay you the difference! 
Ok, so every week, I share market data to keep you informed with the local real estate market.
 
Here is this week’s Boca Market Watch.

First, Single Family Homes:

This past week, an average week, with 37 new homes on the market, ranging from $325,000 to $5 Million!   16 homes back on the market, while 18 homes listed took a price decrease, and 10 sellers raised their asking price.  And  another down week with just 36 different properties under contract, and only 30 going pending.   And just 12 homes were unsuccessful in selling and were taken off the market or the listing expired outright.  And a little better week with 55 homes sold in the past week,  ranging from $83K to $22 Million - now that's a spicy meatball! 

Next up, Condos and Townhomes:

64 new listings, not great, and ranging from $62 Grand to $3.3 Million.  
31 units came back on the market, 24 properties with a price decrease, and 14 sellers with an increase.  73 different properties went under contract, and another 67 went pending, now that's what I'm talking about!. And 18 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired.  89 closed sales this week, a much better week for condos, and ranging in price from $75 Grand to $4 Million!

Here's what's making news right now.  

Everyday we get asked “are prices too high?” Or we hear “I am going to wait for a correction.” We understand the reasons for the concern: Limited inventory - cash purchases … rapidly increasing prices … feverish bidding wars.  I was at a closing yesterday, and this exact subject came up with the real estate attorney.  And today I received an op/ed piece from my lender partner Ira Goldberg, so here's what he has to say about this subject.

Are we headed to another housing crash like 2008? The quick and important answer is NO. Even though there’s been a lot of speculation that the bull run to 2008 and the bull run to 2021 look a lot alike on the surface, they are very different animals:

The 2008 meltdown and appreciation leading up to it was fueled by loose credit standards and low documentation loans to risky buyers - no credit, no down payment, no Income, no problem! If you had a pulse, you got a loan.

Builders were in a frenzy. They built so fast that when the signs of overbuilding began to be apparent in 2006, there was a huge surplus of new construction that put negative pressure on prices.

Underwater borrowers, many having bought over their heads, or on spec, began foreclosing in record numbers, which added to the glut.

How does that compare to 2021?:
High-quality mortgage standards have been in place since 2009. Every borrower for the last 12 years has had to document income, assets, and credit worthiness.
The national inventory of homes for sale is 75% less than the peak of 2008.
Builders learned a lot from 2008. Per Freddie Mac, there were 1.7 million monthly housing starts in 2008. Since then, it’s averaged 1.2 million, which has not kept pace with population growth. Additionally, the pandemic has materially changed housing decisions with more buyers being given freedom to work from home,
Many programs like the CARES Act allowed borrowers to remain in their homes and skip payments altogether if necessary. Many borrowers even saved money, got lower rates through refinancing, allowing them to save even more. Also, fewer people are cashing out their newfound equity.

As the Federal Reserve hints at raising the current historically low interest rates, the market frenzy is likely to continue. Right now, the greatest number of the biggest generation -millennials, born between 1989 and 1993 - are hitting their 30s, and ready and qualified to buy homes.

There are, of course, no crystal balls, but the combination of more qualified buyers, low inventory, rising rents, and lifestyle flexibility all look like they will continue to support the market into the forseeable future.

So what does that mean in real terms?  If you're waiting on the sidelines for that correction before you buy, you could very well be missing out on a once in a lifetime opportunity - simple as that!