The most asked question on Google by a factor of 2450%, Is this a Bubble?
Bubbles happen when you have 3 factors: runaway pricing, lower down payments, and adjustable-rate mortgages. The most significant difference between the 2000s and now is credit quality. The “low doc” or “no doc” mortgages that essentially allowed buyers to make up their income to qualify for a loan are gone.
What we have now are higher down payments, and fixed rate mortgages and thus fixed mortgage payments along with rising home prices. At the end of last year over 30% of homeowners had at least 50% equity in their home. (source: Attom Data Solutions)
The Mortgage Forbearance Program is being phased out. Some will be able to get current with their mortgage payment while some will not and will have to sell. Lawrence Yun, chief economist for National Association of Realtors, doesn’t believe it will be a foreclosure sale because of the strong housing prices.
In Sarasota and Manatee Counties there were a total of 2,584 closed sales in May, an 84.7% increase from the same time last year. Of those sales, 100% of the properties closed at or above the original list price. The median time to contract for single family homes in Sarasota County was 6 days and condos 9 days. The months’ supply of inventory for single family homes and condos in Sarasota County is 0.7 months and Manatee was 0.6 for both single family homes and condos.
In Sarasota County the median home price in May 2021 reached $407,000 which is a 36.6% increase over last year. Manatee County reached $400,000 representing a 23.1% increase over last year. Nationally there has been a 24% appreciation in median home prices from May 2020 to May 2021 with the median home price being $350,000. Sarasota County condos had a median sales price of $315,000 and Manatee of $243,595.
Final Thoughts: Are we in a bubble?
While there is no crystal ball, the data and opinions of economist is that the housing market is not a bubble. If prices do go down it will only be temporary as indicated by Yun. There are second chance home buyers who were out bid and ready to purchase. Over the next 2 years 9.6 million millennials will turn 30, generating the next wave of first time home buyers.
About Diana Fischer
Diana moved to Sarasota in 1990 from New Jersey and started her real estate career in 2008 with Michael Saunders & Company.
She has a background in preparing and negotiating government contracts. Her previous experience also includes the medical field where she developed her listening and human relationship skills which have proved vital in real estate.
She understands that buying or selling a home is one of the most critical decisions people have to make. That is why she feels it is important to listen to concerns and objectives. This enables her to tailor the process to each individual. It is through her dedication, perseverance and compassion that she meets the expectations of customers.
Her designations include GRI and Green. While she loves cooking, entertaining, traveling and reading, her passion is Crossfit.
Interested in buying or selling your home? Contact Diana today!
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Sources for this article include:
Lawrence Yun, Chief Economist & Senior VP of Research NAR
Brian Buffini, Buffini & Co.
Florida Realtors® with data compiled from Stellar MLS
