When will the bubble pop?
Properties are flying off the market in Goodyear and the surrounding area! Sellers are receiving multiple offers and selling their homes over market value. The housing market is hot in most of the US. The big questions on everyone's minds: Is this another bubble? When will it pop?
Most experts agree that we are not currently in a bubble. Mark Stapp, the director of Arizona State University W.P. Carey School of Business's real estate program recently stated to 12 News that "This is not a bubble. This is not gonna all of the sudden pop."
I bet you are thinking but wait, the prices have increased drastically, the market just can't sustain this and prices are going to drop. There are, however, numerous factors that keep us from being in a bubble.
1. There is a housing shortage. When supply is low and buyer demand is high, then the housing prices increase. During the last bubble, we had too much inventory. Currently, we are about 14 million homes short nationwide.
2. People are flocking to Arizona. We've always attracted new residents, but right now there is a high influx of people moving to the Goodyear area. Paired with the low inventory of homes available, the high demand for housing is causing prices to increase.
3. Rates are historically low. Leading to the last housing market crash, buyers were getting adjustable-rate mortgages at low rates, but then the rates on their mortgage adjusted, their payments increased, and they could no longer afford the house payment. Buyers today are locking in awesome rates for 30 years!
4. We do not have a large number of homeowners with subprime loans. Defaults on subprime loans contributed to the crash. Lending restrictions are much more stringent now and you can't get "no income not assets" loans anymore. 100% financing, or no money down, is also much harder to find. You need the traditional 3 C's, Credit (credit score, Capacity (debt to income ratio), and Collateral (down payment).
5. Most homeowners have equity. During the housing crash, people owed more money on their homes than their property was worth. In today's market, most homeowners are sitting on equity, in other words, their home is worth more than what they owe to the mortgage company. People with equity in their homes are less likely to walk away. During the last housing crash, the large number of foreclosures that flooded the market helped contribute to the drop in prices.
While there isn't a housing bubble waiting to burst, most believe that we will see the prices cool off a bit. But will that affect the hot market in the Phoenix area with so many people moving here? That is another big question. We would have to have a lot of houses hit the market for that to happen...
Looking to buy a home in the next 6 months to a year? It's not too early to get a game plan together for buying a new home. In today's competitive market, it's more important than ever to be prepared BEFORE you start viewing houses. I'm here to help set you up for success, feel free to call me at 623-252-9350 to set up a phone call.
