With the surge in real estate prices (and values!) many have concerns about seeing another housing bubble like we experienced starting 10 years ago. Year to date, lakefront home sale prices have increased 14.2% and resale condo sale prices increased 7.2% compared to last year. The number of sales of all properties increased 2.7%
I agree with Lawrence Yun, chief economist for the National Association of REALTORS who says “The suggestion of a new bubble is misplaced, because three major items are left out when looking at the current housing market trends.”
To summarize those items: even though the credit conditions appear to be easing somewhat, the move is from overly stringent conditions to not-so overly stringent conditions. The current mortgage approval process in no way resembles the easy subprime mortgage access conditions of a decade ago. In addition to this, exceptionally low mortgage rates have permitted people to buy a home without overstretching their budget. Finally, the limited supply of homes for sale is what mostly is behind the latest home-price increases, not a housing frenzy fueled partly by easy subprime credit.
With regards to the attractive interest rates and improved mortgage process, it is interesting to note that over 75% of the lakefront homes sold this year were cash sales with no financing involved. I think this is a real testament to the continued return of buyer confidence in purchasing not just a home, but in most cases a vacation home.
Accurately priced properties are not lasting on the market long. Homes and Condos are selling at almost 96% on average of list price and the days on the market are becoming shorter. For buyers this means that making offers less than 8% of list price are probably not going to get much attention and may cost you the property you really want when another buyer comes along with a better offer. Also, do your homework, if the property is priced at or near market value your offer should reflect the same. For sellers, initial pricing is key for an expedient sale and to avoid the stigma of lingering on the market. Today’s buyers have access to a wealth of information including property values.
If you haven’t watched the movie The Big Short or read the book of the same name it is a pretty interesting depiction of the financial crisis of 2007–2008, which was triggered by the United States housing bubble. The movie also has some stellar actors, is entertaining and well made. I give it two thumbs up with one caveat: you may need to watch it twice to pick up on all of the details. I know I did.
That’s my Siskel and Ebert review for the month. Enjoy this beautiful Spring!
Sales data obtained from the Lake of the Ozarks MLS over the time frame from January 1, 2014 to April 19, 2016 and all other times represented in the data.
Michael Elliott has been selling real estate at the Lake of the Ozarks since 1981. He is one of the most respected brokers in the area. If you would like to work with Michael in the sale or purchase of property, contact him at 573.365.SOLD or firstname.lastname@example.org View thousands of lake area listings at www.YourLake.com $1 million plus homes at www.LakeMansions.com You can also view each months’ article, ask questions and offer your opinion on Michael’s real estate blog, www.AsTheLakeChurns.com