The housing bubble was supposed to crash but it didn't...
The housing market was supposed to crash; why hasn’t it?
The first rule of market crashes, nobody can predict a crash. A crash can only be proven in hindsight. When the inflation took off and rates went from 3% to 6% overnight, everyone predicted a housing market crash. I have to be honest, I believed it as well. I’ve been waiting 30 days and haven’t seen it happen in West Michigan.
My team’s pending sales, which is the most current indicator of activity, shows an increase of 10% over last year.
The tried and true sign of a market crash is a massive drop in demand. People think it is a massive rise in inventory. That is not true; inventory is a secondary cause of a drop in demand.
In this case, inventory is up 423%, indicating a crash; however, that is an increase from 30 active listings. Historically and before COVID-19, the MLS would routinely carry 900 active listings. We have a long way to go until we return to a normalized marketplace.
“But Kevin, I’m seeing price reductions all over the place.”
The price reductions are on listings that were overpriced, pie in the sky pricing. At some point, the runaway train had to slow down. You see a regression to the average.
The good news and the reason the market hasn’t and likely won’t crash is the selection of quality listings available is very desirable to Millennials who were outbid during the boom and Baby Boomers who are relocating to the area.
Unless West Michigan loses its amenities, rivers, lakes, and beauty, nothing will stop our housing market from long-term growth.
The opportunity is for sellers to make offers on homes contingent on the sale of their house. That way, they avoid two mortgages and don’t have to list unless they find a better home for their lives.
If you want to learn more about a contingent offer and how we can find you a great deal, send me an e-mail or search for homes at YoderRealEstate.com.
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