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 cme@yourlake.com 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
