Are you hearing people talk about the housing market crash?
Did you know that Google recently reported that the search for when is the housing market going to crash spiked 2,450%? We don’t have a crystal ball, but understanding the facts in this video will help you understand some of the reasons the market is in the shape it’s in now.
The housing market doesn’t operate in a vacuum. It’s driven by simple economic principles, such as supply and demand, as well as financial conditions. Right now, there’s a huge demand for first-time homebuyers because millennials are aging into their mid-thirties, which is the average age for a first-time homebuyer. COVID had us in our houses 24/7 last year. And people realized that they wanted to move up to a bigger or a better home to fit their new lifestyle.
The supply of homes in Grand Rapids is around 0.5 months’ worth of supply. Meaning if no new homes come on the market, all the current homes would sell in two weeks. Builders are busy and new homes are being built all over, but we only had about 1,200 new listings in May of 2021 compared to 1,800 in 2019.
As far as the financial condition, interest rates are at all-time lows, and rents have gone up so much that it’s less expensive to buy a home than to pay rent. With the pandemic shutting down businesses, people have applied for forbearance protection because they haven’t been able to work and can’t afford their mortgages.
So does that mean we’re going to see a bunch of foreclosures as we did in 2008? With home prices as strong as they are, people can still sell their homes and pay off their mortgages. They’re not underwater. And the price of housing has not fallen. According to Lawrence Yun, who is the Chief Economist for the National Association of Realtors, strict mortgage underwriting is ensuring that people can afford the homes that they are buying, unlike the frenzy that led up to the housing bubble more than a decade ago.
Home prices are expected to continue to rise, but not as quickly as they have earlier in the year. It should start leveling off soon. If you’re a seller, now is a time to take advantage of the strong seller’s market. The average home price in the Grand Rapids area is $306,000, compared to a year ago, it was $259,000.
If you’re a buyer, don’t be discouraged. There are new listings coming on the market all the time and our buyers are getting their offers accepted. At A&J Realty partners, we’re here to help you fulfill your dreams no matter the size!