Are we in a real estate bubble?
Lawrence Yun, chief economist for the National Association of Realtors, says that we are on a much more solid footing than the last bubble we had in 2008. Home lending standards are much stricter and there is no subprime market or very little. Prices are rising but very low interest rates are keeping mortgage payments manageable. New construction is coming on the market at half the rate that it did back in 2008. It’s this lack of inventory that’s fueling the higher prices, not easy credit. Fort Collins also has a growth boundary limit and, like Boulder and San Francisco, these limitations will keep prices going up and reduce the impact of future recessions.
At the risk of relentless repetition, the real estate market in northern Colorado is still low in inventory, still appreciating and still frustrating for buyers. At the same time, it is slowing down a bit per usual in the months of August and September.
There is No “Perfect House”
Some houses that are on the market for longer than a week may be not in the greatest of shapes but if the location is doable, buyers should think about buying and quit waiting for the “perfect” house. A lot of investors are buying and flipping homes in 3-4 months, making some decent money while they’re at it. If they’ve done a few houses, they know how to streamline the process and where to spend the money. If you want to be a homeowner, you have to keep making offers on these deals and hope that you’ll get one of them.
Getting into the Market
I’ve seen some good deals lately which means they need a little help but it’s a great way to get into the market. Some buyers are looking toward newer townhomes to avoid having to remodel but if you look at the numbers, attached housing has taking a bigger leap in appreciation this past year than single family homes and they’re getting more expensive. That will stay the same until builders start pulling permits and building more attached homes.
We are seeing a Year-to-Date of 6% to nearly 8% increase in median and average prices in the northeast region for single family homes and a 14% increase in median and average prices for townhome /condos. There’s a 2-month supply of single family homes versus a 1-month supply for townhome/condos.
Don’t sit on the sidelines too long. Yes, we’ve seen damn good appreciation but there’s no reason to think that it will all fall apart for quite a while, if ever.