Here’s why you don’t need to worry about an impending market crash.
It’s a frustrating real estate market for buyers. We have many buyer clients who are trying to get their bearings in a riptide of high demand and low inventory. Sellers are loving their strong positions, but most of them will have to turn around and become buyers too. Selling for top dollar is easier than it’s ever been, but having a home to move into is the difficult part.
Plenty of people have painful memories of the market crash in 2007 and think the challenges of the current market will cause a crash soon. Let me put your mind at ease: This is not the same type of market as in 2007. So what’s causing the market to tip so far in sellers’ favor? It’s basic supply and demand.
Yes, there’s a frenzy of activity and prices are increasing quickly, but the mechanics of our present market are completely different from those that led up to the 2007 crash. We understand the fear; some of you got burned badly last time, but don’t let that anxiety stop you from making a sound investment in 2021! The rate of appreciation we’re seeing right now might not be sustainable, but that’s up for buyers to decide. Prices keep climbing because there are buyers willing to pay tens of thousands of dollars over asking price. Market value is simply what a buyer is willing to pay and what a seller is willing to sell for.
“This is not the same type of market as in 2007.”
Markets are cyclical; they go up and down all the time, and they don’t have to crash to change direction. Though rates are still low from a historical standpoint, they’ve gone up in recent weeks; that will affect people’s buying power and possibly temper the market a bit. That doesn’t change our jaw-dropping low inventory—that takes a while to change. At some point, the market will adjust, as all markets do.
Buying in a seller’s market isn’t the worst thing; if you buy while the market is still trending upward, you’ll surf the tide in your new home long enough to create equity. You won’t buy a home on Tuesday, then find out Wednesday morning that the market has crashed. A buyer’s market is one that is either even or going down; if you buy in a buyer’s market, you could be surfing a downward trend for quite some time before you see any significant appreciation. So as frustrating as it is to be a buyer these days, it has its benefits—hang in there.
If you feel it’s the right time to purchase, then you should do so. We’ll keep fighting for you and getting our buyers into homes they love. The market may soften, and when it does, more homes will be listed. That’s exactly what this ultra-tight market needs.
I invite you to give us a call to talk at length about all the ways today’s market is different from that of 2007 if you’re still worried. Feel free to reach out via phone or email if you have further questions about our market or any other real estate matter. We’re glad to be a resource for you and help with whatever buying, selling, or investing needs you have.