20 years ago we talked so much about prepping for the Baby Boomers and how they will dominate the economy. There is crushing demand for new homes coming from many different population groups. And there just are not enough of these homes to meet demand. The majority of the market still wants to own a single family home in a neighborhood with low crime rates and good schools. Home builders simply have not built enough homes over the last ten years. This is giving current homeowners more cash to use for their trade-up home purchase for either the down payment or to lower the borrowed amount. This means their equity position has improved from both paying down the loan plus asset appreciation. Lastly, current home owners have seen their home values only increase over the last ten years. savings rates in 2021 smashed the typical 4% to 8% monthly rate. And more and more the bona fide economists are saying much of the money went right into people’s savings accounts. Time and again I have been really surprised at the number of 22 to 28 year olds wanting to buy a home who have the down payment and closings cost money.īut, now add in that shitshow which was 2020.ĭo you know what the traditional savings rate is for Americans? And, do you know what it was in 2022 and the start of 2023? Plenty of wannabe homebuyers received stimulus checks, too. But, this latest generation of homebuyers is less indebted compared to their parents. The number one issue with buying a first home is and always has been coming up with the down payment. Homebuyers, including plenty of first-time homebuyers, have the downpayment money. Pretty simple, right? Low rates push prices up. Therefore, the seller can charge more for the underlying asset the buyer will borrow against. Low rates means the cost of servicing the debt is less. This is triggering demand in the housing market. But, now all the big events in life are starting up again. These include births & deaths, children growing up or moving out, new relationships, engagements, marriages, & divorces, and graduations, job placement, promotion, demotion, & relocation. housing market is driven by major life events. Yeah, I am tired of blaming it all on COVID, too. There are five distinct circumstances causing the pinch in the U.S. I call the recent and rapid increase in U.S. The Pinch Causing The Booming Housing Market Of 2023 There are 45,000,000 reasons why the U.S. This surge of home prices has content creators and click-baiters flocking to YouTube, Tik-Tok, and every other low-cost platform espousing their beliefs home prices are in a bubble destined to burst and set home values back 20%, 30% or 50%. The cottage industry of amateur economists has taken off in the wake of rapidly rising home prices starting in 2020. Just because prices are rising doesn’t mean there is a bubble. As an Indiana Realtor® I am here to burst your bubble: There is no housing bubble in 2023, and there won’t be one anytime soon. A bubble is a term used to figuratively describe an inflating event with the perception it will burst.
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