Are we headed into 2006 again?
A question that I get asked often is how is the market and do you think that the market is going to crash soon?
With housing prices appreciating at levels that far exceed historical norms, some are fearful that the market is heading for another bubble. Before we accept that as fact, let’stake a look back at the reasons that caused the bubble ten years ago & discuss where we are today. Last decade, demand for housing was artificially propped up because mortgage lending standards were way too lenient. People that were not qualified to purchase were able to obtain a mortgage and prices began to skyrocket. This increase in demand caused homebuilders in many markets to overbuild. Eventually, the oversupply in new construction and the flooding of the market with distressed properties (foreclosures & short sales), caused by the lack of appropriate lending standards, led to the housing crash.
So where we are today…
1.) Utah has one of the strongest economies within the Nation – The Unemployment Rate is one of the lowest in the nation @3.1% And with the growing economic landscape, job growth is us almost double the national average.
2.) With the influx of people moving into the state, there is a shortage of housing inventory. When the recession hit, new construction came to a near halt.
3.). If we look at new construction, we can see that builders are not “over building.” Average annual housing starts in the first quarter of this year were not just below numbers recorded in 2002-2006, they are below starts going all the way back to 1980.
4.) Although, homes have been appreciating at a rapid growth rate, If we look at interest rates & prices of homes, we are still extremely low on the affordability index.
If you are curious about your home’s value or would like any additional info, please reach out to us. We would love to help you make your next move.
Call us today at (801) 745-0745!