You may be waiting a while if you plan on buying during the next housing bubble.
Today I want to talk about a really important topic for buyers: the housing bubble. Are we currently in a housing bubble?
I have been hearing a lot of talk on the street from people who say they want to wait until the next market crash to purchase a property. If this is your intention, you are going to be waiting a very long time.
In the Grand Rapids area, the economics are extremely strong. The national market has increased about 37% over the last three years, which is obviously a lot of appreciation. But, we have a lot of factors that are in play which are causing this to not be a housing bubble.
We are not in the same pattern as 2006. When that housing bubble was created, we had an oversupply of properties and the cost of homes was over the median income. In our current market, however, we have a massive shortage of properties and the median income supports more home value purchase.
"We have a lot of buyers who are desperately struggling to buy, which we will have to absorb before we reach a housing bubble"
One of the biggest factors that causes pricing in any market is supply and demand. The supply and demand here is less than a month’s worth of inventory. We will need to about six times as many listings to get back into a normal market at our current rate of demand.
In my opinion, six times might not even be enough because of all the buyers looking. We have a lot of buyers who are desperately struggling to buy without success. We probably are unable to absorb all of these buyers because of the major imbalance.
Builders cannot keep up with the growth of population. We are experiencing a shortage in housing. Economists believe that our upward trajectory will continue until 2024. You can read about that here.
If you would like to speak further about this or are interested in buying a new home, please feel free to contact me. I look forward to speaking with you soon.