Many current and future homeowners are wondering if the red hot housing market will continue – and rightfully so. You’re not alone!
We’re here to leverage our regional real estate experience to educate homeowners, buyers, and sellers on the current state of the housing market so that they can be best informed to make decisions that will help them reach their real estate goals. In this blog, let us help to clear the air and set the record straight on some of this housing market’s most frequently asked questions.
Why is the housing market the way it is?
The root of the current housing market is low inventory. Multiple factors have contributed to the low inventory in the greater Green Bay area, including:
- Labor and materials shortages are leading to slower building times and an extreme jump in cost to build. These slower build times contribute to a higher demand for homes because there are simply more home buyers currently shopping than there are homes that exist.
- Infrequent home turnover and less home availability due to Empty Nesters staying longer in their current homes.
- Millennials have entered the home buying stage of life, surging the market with home buyers.
- Due to the lower standard cost of living in Wisconsin and the rise of remote work, many buyers are migrating to Wisconsin – leading to an influx in population.
- The demographic of sellers in their late 70s are avoiding downsizing their homes because they may be intimidated by the fast-paced market. These homeowners may also prefer to stay put in their homes than leave themselves vulnerable to nursing homes in the midst of another pandemic.
Will home prices continue to rise?
Interest rates are slowly on the rise, which directly influences home values. A steady and slow rise in interest rates will likely create stabilization of home prices. As interest rates increase, the equation of affordability will keep home prices from rising so sharply (we saw an average of home prices increasing 20% last year…unheard of in our market). In other words, pricing will likely level off and/or have a slower level of increase.
Real estate forecasts are predicting that while we may see prices rise slightly higher; overall, we have witnessed prices hit their peak. Most experts do not anticipate a decline (sharp or gradual) in home values, and neither do we.
Is there a housing bubble? Is this the 2007 housing crisis 2.0?
Simply put – NO, we do not believe the housing market will crash as the strength of the market is due to the simple economics of supply and demand.
While many people are comparing this market to the 2008 housing market crisis, this housing market is, in fact, much different from the 2008 market for five big reasons:
- There are much stricter lending standards. Most people have a great deal of equity in their homes as they had to come up with a 20% down payment.
- Interest rates are slowly rising.
- Foreclosures are at record lows, due to all of the equity in the home.
- We are in a strong job market. Who is not hiring??
- There are good reasons for continued demand. We are in a paradigm shift on how Baby Boomers and Gen Xers want to live and what it costs, home-wise, to make that happen for them.
How does the market affect me?
Sellers: It is a truly unique time to be a home seller! If you have been considering selling, we strongly encourage you to take advantage of this historic seller’s market to make the highest return on your investment that you can. Simply put, we are not likely to experience another housing appreciation market like this again in our lifetime.
Buyers: While the market is intimidating, we want to assure you that your home ownership dreams are still within reach! Landing your dream home may take more patience, but real estate is an investment that is always worth the wait. Trust me we WILL find you the home of your dreams.
While the future of inflation and interest rates are uncertain, knowledge is truly power in real estate. We have harnessed years of real estate experience to forecast to the very best of our ability. In 25 years, we’ve seen all kinds of changes. We know our “stuff” – big time.
Your real estate education doesn’t need to end here! Our door is always open to all who are looking to inquire about all things Northeast Wisconsin real estate. Reach out to the office today, so we can answer more of your burning real estate questions. We are here to guide you on your Real Estate needs.