SunCrest Market Updates May 24, 2021

May SunCrest Market Update

Are We In A Bubble (And Is It Going To Burst)
We get asked this a lot—is this another housing bubble? The recession of the 2000’s is still in our minds, and home prices have recently skyrocketed, while wages haven’t kept pace. While it’s true that the current market won’t last forever, we don’t yet see any kind of burst imminent. Here are three signs to keep an eye on:

#1 Low Inventory
Currently, there are still far more buyers than there are homes for sale. New construction can’t keep up due to labor shortages, tighter financing, and disruptions in supply chain due to the pandemic. As for existing homes, the late 90’s and early 2000’s saw people moving every 4 years on average; today, people are staying put nearly 8 years. As long as inventory stays low, demand may continue to drive up prices.

#2 Tighter Lending Guidelines
Without a doubt, the way we get a mortgage has changed since the financial crisis of 2008. Down payment minimums and credit score requirements have all increased, and those “no-document” loans that let borrowers make up their own income without verifying are a thing of the past.

#3 More buyers
The wave of first-time buyers continues over the next two years, nearly 10 million millennials will turn 30, and Gen Z is close on their heels. As they continue to hit home buying age, we expect to see many continuing to seek home ownership. While there are some very early signals that frustrated buyers are now leaving the market, the demographic data doesn’t lie—a new generation of homebuyer needs to live somewhere.

Our Take
The housing market continues to be a hot topic at the water cooler, dinner table, or headlines in the media. We get it. While the current pace and velocity of pricing and transactions may change, we think the market is more likely to change shape, rather than burst. Affordability will become a hot topic, with some shift to higher density housing and “starter home” units, especially if wages lag behind. We also look at the toilet paper effect from the beginning of the pandemic. Frustrated buyers stopped trying to stock up, supplies caught up, and the market stabilized. For now, SunCrest and the Utah market continues to buzz thanks to its active lifestyle, variety of community amenities, and growing population. Reach out if you have questions. We’ve love to help.