Pop Pop Fizzle Fizzle There Goes The Neighborhood! Taking a look at the latest Real Estate Bubble.
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Pop Pop Fizzle Fizzle There Goes The Neighborhood! Taking a look at the latest Real Estate Bubble.
Pop Pop Fizzle Fizzle There Goes The Neighborhood! Taking a look at the latest Real Estate Bubble. Will the bubble burst? The short answer is no, not for the foreseeable future. If you have been living in a hole for the past year ( and actually that sounds almost nice ) you may not have noticed the real estate market has gone bonkers ( again). This has happened twice now in my career, once in 2008 and again now. There are many differences between these 2 bubbles- the big one is this one is pandemic driven, demand-driven, and has come along with even lower, rock bottom, lowest in history, low mortgage rates.
When we are in areal estate bubble it means that prices are UP which is fueled by demand but that these are “inflated” prices. This is the kind of market where buyers tend to escalate their offers, remove many “contingencies” like home inspections, appraisal and even finance contingencies. I saw for the 1st time in my career a buyer offer to pay the seller's closing costs to win a competitive bidding situation. When the real estate market benefits the seller that’s known as a “ Sellers Market”. Increase demand and low supply.
My friends and neighbors ask me all the time, will this market last? People are asking because they see neighbors selling or their friends selling for top dollar. There is almost a latent desire by sellers to be more wanted, have more showings, get more offers and escalate higher than their neighbors so it creates a bit of an unhealthy expectation. Not every property is positioned in a way to get that “feeding frenzy” and sellers can feel let down despite getting a good, solid offer for a smaller buyer pool.
As much as you love to see a seller getting a great price, heck as a homeowner I want that same value too, it does produce a market that also has some down sides even for seemingly “successful” sellers. Many buyers who waive everything, can get big time buyers remorse. They may come back through for their pass/fail home inspection and want to void. Or void on HOA because the next “Big Fish” has come to the market. The seller could get stuck going back to the market, burning days on the market and possibly end up getting a lower offer. Buyers are not as willing to overpay when there is not a sense of urgency among the buyer pool.
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