The New Real Estate Bubble
Posted in real estate with tags bubble, first time home buyer, how-to, Real estate update, Realtor, San Antonio Real Estate on May 12, 2008 by ccowleyFor the longest time all we heard about from the national media was that there was a real estate “bubble”. The bubble was going to pop and the market would be in a free-fall across the United States. You wouldn’t be able to sell a home because of it, and you’d be a real idiot to buy a home because they would all be extremely overpriced. And you know what? This happened! The thing is it did not happen all across The United States. It happened in certain selective markets where people previously saw huge increases in property value. Just like the dotcom bubble of the 90’s some stocks did fall to all time lows or completely disappear, but that was after the same stock soared to unbelievable highs! The old, steady, slightly appreciating stocks, that only old-timers and people who didn’t understand the “new” stock market bought, kept on going and some of them still are today. That is how the real estate market went as well. California, Nevada, Florida, and some others were hard hit. There are people there who are in real trouble, and who are probably having some sleepless nights! But then there are markets that are doing just fine. I’m in San Antonio, TX and I can tell you there aren’t many areas of town where prices are leveling off, and I can’t think of any where they are dropping! And we aren’t the top market either! Over in West Texas where the economy is booming thanks to high oil prices you can’t hardly buy a house without getting outbid on it! Ask them about a bubble and they’d laugh at you! I have said it in many blogs before, but it is always worth repeating - REAL ESTATE IS LOCAL!
So what is the NEW REAL ESTATE BUBBLE? I think the new bubble is a growing want and need for people in many markets of the US to buy and sell property. The reason they are not is because they are scared. They are scared from all the media hype about how bad the real estate market is. Here is the thing though; they just had another child and the house is now too small, they got a raise at work and can now afford to buy, the last kid just moved out and it’s time to downsize, they want their kids in a different school district - ALL REASONS PEOPLE TYPICALLY BUY AND SELL HOMES! Life is still going on! A lot of them are holding off because they think the real estate market is crumbling, but they see interest rates are low, see they can still afford a house, and they know what they can afford, and you know what will happen: THEY WILL PUT UP THE OLD HOUSE FOR SALE AND BUY A NEW ONE! What will it take? Probably their neighbor to put their house up for sale and sell it. Maybe a nagging wife or a grouchy husband will have enough and just do it! Who knows, but the anticipation is growing! And finally when people say, “To hell with what the national media is saying. We need a new house!” That bubble will pop and the market will get back on track. There are just too many good things happening in San Antonio, TX right now for the market to not be more active than it is. The bubble is growing! In influx of 20,000 new jobs that San Antonio has in the works, unemployment under 4%, and an average home price of $185k means that bubble is going to burst!
Above I primarily was speaking about move up buyers, but there is a whole segment of potential buyers that are causing that bubble to grow even bigger - FIRST TIME HOME BUYERS. These folks are what will put the real estate market back in motion. Why? Several reasons, but what may be the biggest came from FHA. FHA loans were almost disappearing during the days of Sub-prime loans, but with that collapse, FHA loans are making a come back, and just recently an extremely significant thing happened which could be the needle that pop the bubble! The loan rates were raised. In San Antonio, TX you can now get an FHA loan over $330,000. We are one of the few markets where the FHA loan limit is considerably higher than the average or median home price! Our average price is $187,000. So believe me you can get a VERY nice house in San Antonio, TX for $330,000! Here is another huge advantage for first time home buyers with an FHA loan: ALL of the down-payment can be gifted from someone “as close as family”. So if you’ve been out of school for just a couple years making a nice living, but don’t have all the money you need for a down payment - Mom or Dad can “gift” you the money for the purchase of a home! If you are just out of school and are making some decent money, your parents could co-sign on the property for you and the lender would use them to get you loan. This even works if you are still in school - commonly referred to as a “kiddy-condo” loan. So now is a great time for first time buyers to get into the market and buy a home, but the problem is they are hearing so much negative press that makes think they can’t get a loan or that now is a bad time to buy. Neither of which are anywhere near true!
So what can you do? Get educated on your LOCAL market! Talk to your Realtor about what is going on. Maybe you are in a tough market, but maybe you are not. Your Realtor can help you figure that out. Then if everything checks out and the timing is right - GET THAT HOUSE ON THE MARKET, or GET OUT AND LOOK AT SOME HOUSES! There really is no reason to wait if you educate yourself on what is going on, work with people you can trust, and feel you are in a strong market!
If you are in San Antonio, TX and would like to visit with me to get a SAN ANTONIO REAL ESTATE UPDATE, please give me a call or go to my website.
Chris Cowley
210-389-6006