Top 3 Myths About Today’s Real Estate Market Answered

Nice article from https://www.capegazette.com/ that explains some of the Myths of today's real estate market.

Myth #1: We Are Headed for Another Housing Bubble?

"Home prices have appreciated year-over-year for the last 76 straight months. Many areas of the country are at or near their peak prices achieved before the last housing bubble burst. This has many worried that we are headed towards another housing bubble."

"Reality: The biggest challenge facing today’s real estate market is a lack of homes for sale! Demand is strong, as many renters have come off the fence and are searching for their dream homes."

"Historically, a normal market requires a 6-month supply of inventory in order for prices to rise with the rate of inflation. According to the National Association of Realtors (NAR) there is currently a 4.3-month supply of inventory"

Homes where not being built from 2006-2016 except in the luxury market. That is why there is a lack of affordable housing available today. The builders are building again and they have a long way to go to catch up with the last eight years

Myth #2: The Rumored Recession Will Lead to Another Housing Market Crash

"Economists and analysts know that the country has experienced economic growth for almost a decade. When this happens, they also know that a recession can’t be too far off. But what is a recession?"

"Reality: Recession DOES NOT equal housing crisis. Many people associate these two terms with one another because the last time we had a recession it was caused by a housing crisis. According to the Federal Reserve, over the last 40 years, there have been six recessions. In each of the previous five recessions, home values appreciated."

That means that the homes will almost always appreciate. New lending laws and the way the feds grade their mortgages really makes having a recession not real probable. It is not a housing crisis either, we think prices will remain solid and lending will also be restricted to people who can afford the home. Bigger down payments and more conservative lending

Myth #3: There is an Affordability Crisis Looming

"Rising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.

There are many different affordability indexes supported by different organizations that all measure different data. For this reason, there is a lot of confusion about what “affordable” actually means.

The monthly cost of a home is determined by the home’s price and the interest rate on the mortgage used to purchase it. According to Freddie Mac, interest rates have risen from 3.95% in January to 4.59% just last week."

"Reality: As we mentioned earlier, home prices have appreciated year-over-year for the last 76 months, largely driven by high demand and low supply.

According to a recent study by Zillow, the percentage of median income necessary to buy a home in today’s market (17.1%) is well below the mark reached in 1985 – 2000 (21%), as well as the mark reached in 2006 (25.4)! Interest rates would have to increase to 6% before buying a home would be less affordable than historical norms.

The starter-home market has appreciated at higher levels (9.4% year-over-year) than any other market. One reason for this is the fact that many of the first-time buyers who have flocked to the starter-home market are being met with high competition. For some hopeful buyers, it may take more than a good offer to stand out from the crowd!"

Starter homes do appreciate at at higher levels, because their are more buyers in the market for them. The less expensive homes in a expensive area, sell faster than the higher ones.Lending on these homes can be done FHA and are not usually jumbo loans as you do with luxury or higher priced real estate. FHA are easier to finance and the down is reasonable.

The key is having a Realtor that understands the local market and where to purchase a home. That takes 100's of transactions and a construction background. I have both please let me help you buy or sell your next home. I'm Brett 216-703-5740 EXP Realty Ohio and 602-363-6551 EXP Realty Arizona