Is the market going to crash? Are we experiencing a housing crisis?
If we were looking for click bait, these are the statements we would use.
There are many factors contributing to limited supply of homes and high buyer demand. However, it is not a crisis and market our market is not going to crash.
• The current housing supply is 78% below normal.
• The current housing demand is 14% above normal.
• Home values are appreciating at record levels.
• 49% of homes are being sold over the list price.
We are experiencing a shortage in inventory because the number of homes being built, both single family and multi-family, has not kept pace with our population growth.
Builders have struggled to keep pace with demand due to natural disasters which caused a lumber shortage layered with the effects of the pandemic and a decrease in the labor force needed.
What about the looming foreclosures?
Overall, the number of homeowners currently in forbearance is relatively low, less than 5% of all mortgages. Here in Arizona, if all the homes currently in forbearance were to become foreclosures, our market could absorb those home within 2 months based on current demand. However, Arizona is not anticipated to experience a high number of foreclosures due to strength of our market, continued incoming relocation, and low interest rates.
What will the future bring?
Will the housing market flatten? Will homes price fall? When will it be a Buyers’ market?
The current trends are showing the market will begin to balance in about 8-12 months. This means housing supply and demand will become more complimentary to each other. Normal demand – normal supply. Homes will continue to appreciate but not at the rate we are seeing now at 10-15% month over month. Does this mean it will be a Buyers’ market? Not entirely, over the next 12 months home prices will continue to appreciate. So you may have less competition when making an offer but the $450,000.00 home in todays market will be priced at $500,000.00 in 12 months.
If you have questions about the real estate market, if you are trying to decide when it is the right time to buy or sell for you, call us today.
At Bella Casa Realty, we are here to bring you the facts about what is really happening in the real estate market and provide advise & guidance for your real estate needs.
(Statistics quoted in this post gathered from The Cromford Report).