We're a little more than 1/2 way through what has been an insane 2021 real estate market, and the question I get the most is; "Is this a bubble?"
The answer is no. The last bubble was caused by runaway pricing, low down payments, and adjustable-rate mortgages. While our pricing is certainly up, our buyers are putting more down, and they're simply better qualified to repay their mortgages.
So even if the market were to adjust, the equity and sensible payment would protect a homeowner from going underwater.
The second reason we're not expecting a 2008-like decline is the amount of inventory on the market. Currently, we have about 1.2m units nationwide (according to Lawrence Yun, NAR economist). During the great recession, our inventory levels sat at four times that. So unless there's a catastrophic event that dumps 3 million homes on the market, it's unlikely we'll see a flood of inventory any time soon.
Further, some fatigued buyers hit the pause button. They haven't dropped out of the market altogether; they're just waiting for the right time to jump back in. And if we get a little more inventory and prices cool a bit, there's plenty of second-chance buyers to absorb those homes.
The second most often asked question is, "should I wait?" Of course, I don't have a crystal ball, but historically, San Diego real estate has always increased in value over time. Also, real estate is about the best hedge against inflation you can have--a fixed payment on an appreciating asset? With tax advantages? Yes, please.
If you're a seller, you may not be seeing the frenzy of activity and the escalation in pricing that defined the first half of the year, but it's still a strong market if you're priced right. Sellers should beware of overpricing now more than ever, as savvy buyers can spot opportunistic pricing a mile away.
So, no bubble, low inventory, and qualified buyers should keep our local real estate market healthy through 2021 and into 2022. Questions? Feel free to call me for your personal consultation.