Just curious what others think about the soaring prices of homes in our area? I know the economic conditions are not the same as the previous real estate bubble, but I'm wondering how long these rising prices can be sustained.
Misc Are we entering a real estate bubble?
- Thread starter Ohio Girl
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I don't see demand letting up for awhile, if ever.
Summer is always busy for South Walton real estate.
All real estate is local as they say. South Walton has always been its own animal pretty much when it comes to real estate. We are seeing inventory at historic lows, lots of new people moving here, and a commercial boom.
Lumber and other material prices have pushed up prices of new homes, as has demand from new residents moving here. Watersound is the last large tract of undeveloped land in South Walton. Prices near the beach are going to continue to climb. We've seen this no matter the national trends.
So many closed sales in SoWal are cash. As long as stocks continue the hot streak people will have cash. If the market dips they will take money out and buy real estate.
Summer is always busy for South Walton real estate.
All real estate is local as they say. South Walton has always been its own animal pretty much when it comes to real estate. We are seeing inventory at historic lows, lots of new people moving here, and a commercial boom.
Lumber and other material prices have pushed up prices of new homes, as has demand from new residents moving here. Watersound is the last large tract of undeveloped land in South Walton. Prices near the beach are going to continue to climb. We've seen this no matter the national trends.
So many closed sales in SoWal are cash. As long as stocks continue the hot streak people will have cash. If the market dips they will take money out and buy real estate.
Was discussing this yesterday with a real estate attorney. He and I have been in the area for 20 years and went through the 2004-2012 fiasco. This time around is totally different. The most important difference is that most people are paying cash and not financing. In addition, people are buying primary homes to relocate here, or second homes that they do not intent to rent out. Buyers are not speculating; they are buying for their own use and are not going into debt so even if the market slows we won't see massive foreclosures and underwater mortgages like we did last time. Incidentally this attorney has done closing from primary homes for people moving here from all over the country, and even internationally.
Low interest rates are the primary driver, and we likely won’t see a large change in those for a while. As long as money is cheap to borrow, consumers are going to buy property. Couple that with the pandemic coming to an end, you’ll see more inventory and more buyers enter the market. (It’s a good time to be a real-estate agent!)
I’d say the current boom will continue for a while. For rates to increase, you need strong economic growth and as a side effect inflation. If we see things start to heat up the FED will start to raise rates, and that in turn will cool the housing market. Those increases take years to play out, so we have a long way to go on rates before they become prohibitive to home purchasing.
Also I would ignore current chatter about inflation rising right now, that’s largely a result of lack of production caused by a workforce that’s still sitting at home waiting on the end of the pandemic. I’d bet we’ll hear about rising wages too, as producers get more aggressive in trying to find workers. Overall though this should mellow out over the next year or so as people continue to get vaccinated and Covid fades away.
It’s a good time to buy, build, and especially refinancing an existing loan. If you buy now you may be purchasing at a higher price point, but waiting on a major downturn could take years, and lower rates mean you’ll end up spending less anyway compared to what you might spend when rates are higher.