Another Housing Bubble?

ImageSome say yes, others say no.  Are we seeing increases in pricing?  Yes. It was recently announced in a CoreLogic article that sales prices have seen the largest gains since 2006. Home prices have been creeping up in the Orlando marketplace for about a year now.  Lack of inventory has helped to spur this trend.

Are we seeing increased demand?  Yes.  It’s the law of supply and demand.  Low supply equals increased demand.  Many homes in the Orlando area listed at $180,000 and less are being met with a slew of buyers – and offers.  Investors are placing offers on properties, often times sight unseen and over list price, leaving many a financing dependent, first time buyer  out in the proverbial cold.

Does this mean we are facing another housing bubble?  Possibly.  Banks still own properties they have not released to the market.  Some suspect they are holding inventory down to help drive up values and prices will drop dramatically if these properties were released to the market simultaneously.  Would this happen?  Likely not.  I think banks have realized what a strong hold they have on real estate values.  They are not likely to flood the market when they stand to gain more by releasing properties slowly.

ImageWe are seeing a wide variety of buyers in the Orlando market.  We have first time buyers, investors on small and large scales, foreign nationals, second home purchasers and your traditional local buyers who are moving from one local area to another.  Although I can’t speak for areas outside of my market, I don’t see buyer demand dwindling any time soon – especially since many buyers are having to write offers on 4 or 5 different properties before one sticks.  Competition is that fierce.  Combined with low interest rates and record numbers for housing affordability, it is likely buyer demand will continue through 2013 – barring a catastrophic rise in interest rates, which is not likely as the FED plans to keep interest rates low, or a substantial boom in housing prices (doubtful since it appears many have learned their lesson from the last boom).

Yes, values may be being artificially inflated with the aid of banks suppressing inventory, and yes, interest rates may be being held at artificially low rates, but is there enough demand to sustain this “bubble” until we are able to reach a more solid state of normalcy?  I believe the answer to be yes.  Keep your fingers crossed with me.  🙂


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