No Bubble, No Trouble!

Why the seller’s market is not a bubble like we saw during the Great Recession.

The Suncoast real estate market currently has low inventory, making it a great time to sell. I am often asked if this means we are creating a bubble that will lead us into another recession. The short answer, “no, it’s not a bubble.” This is the good news, and here are some factors that indicate that this is good old-fashioned supply and demand. Though there may be a slight slow-down or correction in time, our market appears to be much more solid and strong than it was in the mid-2000’s.

The market acceleration leading up to the Great Recession was caused by these factors:

• Rampant flipping! Prices were going up so fast, investors were buying properties and flipping them for short-term financial gain. Even with new construction, buyers would purchase pre-construction in hopes of selling for a profit before even taking possession!

• Poor lending practices - Lenders were lending money to anyone without proof of affordability and based on “stated” income as opposed to real income.

• Appraisals: Appraisers would appraise at whatever they needed to appraise a home at to satisfy the lender and justify a loan.

The factors that indicate a supply and demand-based market:

• Most buyers are purchasing for their own personal use, and investors are purchasing more for long term appreciation and tax deductions than flipping for short term profits.

• Lending practices are highly regulated, and it is even difficult to get a loan these days. Credit lines are not even available today through most lenders.

• Appraisals are also highly regulated. Lenders have no personal relationship with the appraisers. Instead, they contract with large appraisal management companies who assign appraisers.

So now you may be wondering if it is a good time to buy. According to real estate site, Keeping Current Matters, and based on expert projections, there is a cost to waiting:

From a purely financial aspect, buying now instead of next year is a smart move. As we all know, deciding to buy a home means more than financial consideration. I am here to help you with your next move, every step of the way. Please contact me today if you have questions about whether the time is right for you. Call me at 941-504-3303 or drop me a line: beverlysthilaire@michaelsaunders.com.