Over the last several years…especially since the real estate bubble burst in 2007 or so, we saw a glut on homes (foreclosures and short sales) available at “discounted” prices. “Discounted” is a term we real estate folks use to describe a home that is selling for less than what it’s worth or a home that represents a great bargain at that price. This group of homes is described as “shadow inventory” or homes that were about to come on the market in bulk and drive prices even further down.
The process worked something like: Too much supply…prices driven down…buyers scared to enter a falling market….prices drop some more. This was the cycle until 2009 (or so) and in 2011 (or so), the housing market showed signs of stabilization.
The process then changed to: Market looks stable…homes are cheap…buyers move in to gobble up the deals….demand drives prices up in a hurry.
That surge has tapered off now (thankfully) and home price increases are moderating. The 10%-20% annual gains we saw for a year or two are now returning to the 3%-4% gains we’ve seen in the past. That’s a good thing.
Why do I bother to bring this up??
Well, some would-be home owners haven’t caught up with the realities of the market and it’s causing them to miss out on opportunities that could have an enormous impact on their standard of living and their wealth.
The truth is (as you can see from the map below) the shadow inventory is nearly gone except in a few states. That means the bargains (for the most part) are gone as well.
BUT, if you are interested in owning a home (and I would argue you should be) this is still an amazing time to buy a home! Home prices are still going up in ways that make them a great investment.
Interestingly, rentals (a favorite of Millennials) are going up FASTER than home prices lately. This will eventually drive millennials to buy homes and that will…you guessed it…drive home prices up even more. Don’t get us started about how low interest rates are these days and the impact these rates have on housing affordability and your payment. What are you waiting for??
Bottom Line…call us today so that we can get you ready to own a home. Let’s look at your credit. Let’s look at your savings (or how to improve it). Let us show you loan programs that make it easier to buy a home. Let us show you how your family may be able to help.
