Are we in a bubble?
Someone recently asked this question to financial expert Dave Ramsey on his radio show. They were wondering whether they should sell now, live with their in-laws for free, and wait out this crazy market. Dave’s answer was a resounding ‘no way.’ The market won’t be going down anytime soon due to basic supply and demand. Dave’s had his real estate license for about 35 years, and in those 35 years, just once has the market plummeted across the nation: 2008.
At this point, most people realize the difference between now and then, but in case you don’t, here’s a quick refresher. Back then, a lot of people were getting mortgages who probably shouldn’t have. In addition to that, they were getting some wacky terms, so they weren’t able to fulfill their obligations. Now, we have a basic supply and demand problem. Builders are still behind from not building as many homes in 2008, and mortgage rates are low. People see this as an opportunity to move up into their next homes.
“The market won’t be going down anytime soon due to basic supply and demand.”
That said, we do think the market will eventually cool down because it can’t go on like this forever, whether that’s due to mortgage rates rising and catching up with building or any other reason. When we say ‘cool down,’ we don’t necessarily mean the market will go down. We just mean there will be fewer multiple-offer situations and the environment won’t be as competitive.
One of the biggest concerns for buyers is whether they’re paying too much for homes. As a matter of perspective, one notion we want to bring to the table (and one Dave Ramsey talks about) is this: What is value? Value is what happens when a willing buyer gives a certain amount to a willing seller. If one buyer is willing to pay more than another buyer, that’s the home’s fair market value.
Dave also made the point (which we agree with) that we’re creating new trends in our market. If someone claims a home isn’t worth a certain price but it is worth that price to someone else, that’s the home’s fair market value. Be careful about being hesitant to overpay for something, because prices are rising almost every single month.
We invite you to follow this link and listen to Dave Ramsey yourself. If you’re wondering whether you should sell now or wait or have any other real estate questions, don’t hesitate to reach out to us. We’d love to hear from you.
