We’re Not in a Bubble!
For as much gossip and trepidation as there is circulating in the current market, we're not presently in a housing bubble!
There were three major causes of the 2008 housing crisis that we aren't currently facing:
45% of first-time home buyers purchased their starter homes in 2008 with zero dollars down.
78% of first-time homebuyers utilized adjustable-rate mortgages (ARMs) at that time, rather than fixed ones.
We had a huge oversupply of inventory then.
Today, the average down payment on a home is 16%. People are buying homes with equity. ARMs are very rarely utilized. And, what a dream an oversupply problem sounds like compared to the undersupply problem we’ve been facing.
We're not in a normal market, by any means, but we're also not in a bubble. The fact that home values have grown consistently each quarter these days says that equity is growing and the number of foreclosures is not. Plus, the lending restrictions that came on the scene in 2012 ensure that we all qualify for loans based solely on our ability to pay. Borrowers today must have a more than acceptable debt-to-income ratio (DTI), real, provable income and good credit. These restrictions didn't exist in 2008. Frankly, they make buying harder for millennials, but they keep the market more stable.
Over the course of the pandemic, we've seen a 59% decrease in inventory and an increase in buyers this year of 43%. Ours is a massive supply and demand problem. Fortunately, our low interest rates aren't going anywhere because they're driven by supply and demand; and unfortunately, this demand problem isn't going anywhere either (at least it isn’t projected to until 2022).
Don't mistake today's climate and problems for something that happened under very different circumstances thirteen years ago. It's comparing apples to oranges. You'll only end up waiting, scared, confused and waiting for something to change. Ignore the busybodies screaming, “Bubble!” With a proper understanding of the current Longmont, CO Real Estate market, you’ve got everything you need to make a necessary move.
Let my tenacity move you!
And never forget, you’ve got a terrific partner in Sarah Morrow, your Longmont Realtor. If you’re looking to buy or sell your home in Longmont, CO, I’m your resident expert!