Home values appreciate on average by over 15% percent in 2021 and are forecast to continue rising this year. Voicing concerns that we may be in another housing bubble like the one we experienced over a decade ago. Here are 3 reasons why that’s not the case and the market is completely different today…
1. This time, housing supply is extremely limited…
The price of any item is determined by supply and demand. If supply is high and demand is low, prices normally decrease. If supply is low and demand is high, prices naturally increase.
In real estate, this balance is measured in month’s supply of inventory, which is based on the number of current homes for sale compared to the number of buyers in the market. The normal months’ supply of inventory for the market is about six months. Anything above that defines a buyer’s market, indicating prices will soften. Anything below that means it’s a sellers market in which prices normally appreciate.
Between 2006 and 2008, the month’s supply of inventory increased from just over 5 months to 11 months. The month’s supply was over seven months in 27 of those 36 months, yet home values continued to rise. Month’s inventory currently stands at 2.4 months – near historic lows. Remember, of supply is low and demand is high, prices naturally increase.
2. This time, housing demand is real.
During the housing boom in the mid-2000s, there was what Robert Schiller, a fellow at the Yale School of Management’s International Center of Finance, called irrational exuberance.
The definition of the term is, “unfounded market optimism that lacks a real foundation of fundamental valuation, but instead rests on psychological factors.” Without considering historical market trends, people got caught up in the frenzy and bought houses based on an unrealistic belief that housing values would continue to escalate.
The mortgage industry fed into this craziness by making mortgage money available to just about anyone, as shown in the Mortgage Credit Availability Index (MCAI) published by the Mortgage Bankers Association. The higher the index, the easier it is to get a mortgage; the lower the index, the more difficult it is to obtain one.
Prior to the housing boom, the index stood just below 400. In 2006, the index hit an all-time high over 868, meaning nearly everyone could qualify for a mortgage. Today, the index stands at 128.1, which is well below even the pre-boom level.
In the current real estate market, demand is real, not fabricated. Millennial, the largest generation in the country, have come of age to marry and have children, which are two major drivers for home ownership. The health crisis also challenged every household to redefine the meaning of home and re-evaluate whether their current home met that new definition.
This desire to win, coupled with historically low mortgage rates, makes purchasing a home today a strong, sound financial decision. Therefore, today’s demand is very real. Remember, if supply is low and demand is high, prices naturally increase.
3. This time, households have plenty of equity.
Again, during the housing boom, it wasn’t just purchasers who got caught up in the frenzy. Existing homeowners started using their homes like ATMs. There was a wave of cash-out refinances, which enabled homeowners to leverage the equity in their homes.
From 2005 through 2007, Americans pulled out $824 billion in equity. That left many homeowners with little or no equity in their homes at a critical time. As prices began to drop, some homeowners found themselves in a negative equity situation where their mortgage was higher than the value of their home. Many defaulted on their payments, which led to an avalanche of foreclosures.
Today, the banks and the American people have shown they learned a valuable lesson from the housing crisis. Cash-out refinance volume over the last three years was less than a third of what it was compared to the 3 years leading up to the crash.
This approach has created a level of equity never seen before. According to the U.S. Census Bureau, over 38% of owner-occupied housing units are owned ‘free and clear’ (without any mortgage). In addition, the ATTOM Data Solutions first quarter 2021 U.S Home Equity Report reveals:
“17.8 million residential properties in the United States were considered equity-rich, meaning that the combined amount of loans secured by those properties was 50% or less of their estimated market value… The count of equity-rich properties in the first quarter of 2021 represented 31.9%, or about one in three, of the 55.8 million mortgage homes in the United States.
If we combine the 38% of homes that are owned free and clear with the 19.8% of all homes that have at least 50% equity (31.9% if the remaining 62% with a mortgage), we see that 57.8% of all homes in this country have a minimum of 50% equity. That’s significantly better than the equity situation in 2008.
This time, housing supply is drastically lower. Demand is real and rightly motivated. Even if prices were to drop, homeowners have enough equity to be able to weather a dip in home values. This is nothing like 2008. In fact, it’s the exact opposite.
Want to more about home values before selling or buying a property? Call Lindsey Stapay at 970-435-5700 to arrange a consultation. While we’re at it, Lindsey will provide a private showing of all the properties for sale at the Summit County, Colorado just for you.
So you have decided to sell your property. Before anything else, it is a good idea to sit down and clarify your motivations and draw up a basic time frame for the selling process.
Why do you want to sell your property? Do you intend to simply find a larger property, or do you plan on moving to another neighborhood, school district, city or state? You might think your reasons are obvious, but it would do well to consider the implications of each option for your lifestyle, opportunities, and finances.
Being clear about your intentions for selling will make it easier for us to determine the most appropriate option for your specified financial, lifestyle, and real estate goals.
When Should I Sell?
You should immediately establish your time frame for selling. If you need to sell quickly, we can speed up the process by giving you a complete market analysis and action plan to obtain all of your goals.
If there is no pressing need to sell immediately, you can sit down with one of our expert real estate agents to thoroughly review the current market conditions and find the most favorable time to sell.
What Is The Market Like?
When you work with us, you can be sure that you will have our knowledge, expertise and negotiating skills at work for you to arrive at the best market prices and terms.
We will keep you up-to-date on what is happening in the marketplace and the price, financing, terms and conditions of competing properties. With us, you will know exactly how to price and when to sell your property.
How Do I Optimize My Finances?
Deciding to sell your property demands a serious consideration of your current financial situation and future possibilities. With the help of our qualified agents, you will be able to effectively assess the cumulative impact of these changes, estimate potential proceeds of selling your property, and plan effective tax savings and estate planning strategies.
We will ensure that you not only take control of your finances, but use them to their fullest potential.
Schedule a consultation today with Westward Advisors, your Local Real Estate Team with a Global Reach. 1st class Broker Services are here to sell existing property and to assist with coordinating the purchase of that next great opportunity; whatever that goal is, we make Dreams Come True.
CYNTHIA DAUGHTREY, ESQ
Commercial Team Lead
Residential Team Lead
Main Street Station Condos in Breckenridge CO is located in the heart of all the action in this lively ski town, with shops, restaurants and bars just minutes away. It’s an easy walk to Main Street for some shopping or dining. It has been recently renovated and is now available for sale.
Main Street Station Condo Breckenridge CO features two lifts that take you right up to Peak 8 or Peak 9 of the Breckenridge Ski Resort, which are some of the best skiing runs in Colorado!
Not only that, it has ski-in/ski-out access to Park City Mountain Resort, Main Street Station Condo offers spectacular views of the Rocky Mountains and convenience that comes with living in a ski-in/ski-out condo.
Built in 2000, Main Street Station Condo has a total of 82 residential units comprised of 9 – studios, 38 – 1 bedrooms, 23 – 2 bedrooms, 8 – 3 bedrooms and 4 – 4 bedroom condos ranging in size from 355 – 1957 square feet.
Main Street Station Condo has it all – high ceilings, large windows, granite counter tops, stainless steel appliances and spacious mountain decor. You will also have access to two outdoor heated pools and hot tubs as well as many other amenities including on-site parking garage and underground parking garage.
Each condo is professionally decorated with granite in the kitchens and bathrooms, decks that feature ski area, main street or mountain views in every room, and gas fireplaces.
While enjoying your stay at Main Street Station Condo in Breckenridge, Colorado take in all the amenities including an indoor/outdoor heated swimming pool with panoramic views of the Breckenridge Ski Resort, 6 hot tubs, fitness center with eucalyptus steam room, private 25-seat movie theater (must be reserved), pioneer club to relax by the fire and enjoy a cocktail, 24-hour front desk and bell service and an onsite concierge.
When considering Breckenridge Real Estate, Main Street Station is a condo complex not to be overlooked.
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(Photos courtesy of Main Street Station Breck)
621 Recreation Way, Frisco
Frisco Adventure Park tubing hill is a great place for kids to be kids (36″ or taller) and adults to be kids again!
The hill features lengthy 1200-foot tubing lanes with lift service up the hill for tubing day or night under the lights. With evening hours of operation, you can enjoy an hour of tubing, have an adventure after a day of skiing, spend a full afternoon enjoying a beginner ski or snowboard lesson with an hour of tubing, or bring the whole family for a custom adventure.
Hours and days vary. Call 970-668-2558 for more information. Reservations are highly recommended (required during peak times). You can register online or you can call 970-668-2558 to register by phone.
100 N Main St. Breckenridge
Whether you are an experienced snowmobiler or a beginner, Breckenridge Snowmobiling has the perfect tour for you! They offer miles of well-groomed trails through vast meadows, spectacular vistas, and other dazzling Rocky Mountain destinations.
Snowmobiling group sizes are small, so you can enjoy a tour that is more focused on you and your adventure. Call 970-455-4040 for more information and reservations.
68 Continental Ct., Breckenridge, CO 80424
What could possibly be better than an ice cold beer after a fun-filled day outdoors? How about an ice cold locally brewed beer after a fun-filled day outdoors? Broken Compass Brewing is the perfect hangout spot for delicious drinks, great friends, and good times. If you’re looking for a way to spend an evening in Breckenridge, this is it!
Opens every day at 11 A.M. Bring your own food. They are dog friendly (as long as your dog is friendly).
200 Clubhouse Dr. Breckenridge
The Breckenridge Golf Course is situated in the breathtaking, glacier-sculpted Upper Blue Mountain Valley. The only town in the world to maintain a Jack Nicklaus-designed 27-hole golf course, the clubhouse sits at an elevation of 9.324 feet. Visiting golfers get an immediate confidence boost as the golf ball flies farther and straighter than at lower elevations due to less air resistance.
For more information and to book your tee time today, visit Breckenridgegolfclub.com for a complete description of the courses at the Breckenridge Golf Course.
Road Biking: Summit County- From Breckenridge, Frisco to Dillon and back- Recreational Path – Bike, E-Bike, Skate, cross country
The Town of Breckenridge is home to a seven-mile section River Recreation path, known locally, as the “Rec Path” a paved, mild path follows the Blue River through town limits and beyond. The Rec Path sits in the shadow of the Ten mile Range and is open to runners, hikers, dog walkers and bikers of all types. It’s the perfect route for a family cruise. For more information on the “Rec Path” and rules of the road townofbreckenridge.com.
To rent a bike for the entire family please visit www.Alpinesportsrental.com.
Are you looking for a horse property? Ruby Ranch is one of the few Silverthorne homes subdivisions that have designated estrian rights. Located approximately 2 miles north of I-70 and bordering the Eagles Nest Wilderness, Ruby Ranch is where you can find luxury homes for sale in Silverthorne CO.
There are a total of 54 home sites, 49 which have existing houses that were built between 1981- 2010. The majority of the lots are set on larger acreage but they range in size from 0.25 – 26.34 acres. If you are looking for privacy, Ruby Ranch is a gated subdivision that can only be accessed by a code.
Be amazed at the jaw dropping panoramic views of every property in Ruby Ranch from views of the Gore Range, Keystone Ski Resort, Lake Dillon and Buffalo Mountain are in abundance in Ruby Ranch, Colorado.
A private equestrian facility in Ruby Ranch. The equestrian center has a barn to board horses, outdoor riding arena, a tack room, feed room and eight indoor stalls. There is a fee to board horses at the equestrian center which includes morning and evening feeding and daily stall cleaning. The equestrian center at Ruby Ranch has 50 acres of pasture but throughout the subdivision and surrounding wilderness there are over 180 miles of trails for riding horses.
Although horse property is scarce in Summit County Real Estate, Ruby Ranch offers horse facilities and more. If you are looking for a mountain getaway with privacy and views, make sure you arrange to see all homes for sale in Ruby Ranch, Silverthorne CO Real Estate.
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