As real estate agents, we at The Kolb Team naturally get asked often about the current market and the crazy rate at which housing prices have been increasing over the past couple of years. We often hear from buyers “I am going to wait until prices come back down”, or sellers saying to us “We feel we should get out now before the housing market crashes again”. We had already planned on addressing this particular subject this month, when Carey came across an article in Time magazine titled “Waiting on the Housing Market to Crash? Don’t, Experts Say. Here’s How Today’s Market Is Different from the Great Recession Housing Bubble.” Long title, long article… but it was so well written! Carey decided to summarize it for you so you will know the most important points, as far as The Kolb Team is concerned.
According to Redfin, 77% of homebuyers feel we are in a bubble right now, headed for a significant correction. Today’s market is different than the pre-crash market of 15 years ago. At the heart, the reason we are not in a bubble is simple: supply and demand are driving prices up. There are just not enough homes for everyone who wants to buy one. Below, we outline what is different about today’s rapidly rising market.
Lending is Much Tighter. The last bubble was predominantly due to loose lending practices and more people entering the rising housing market for speculative investment purposes rather than to live in. Neither of those things are happening today.
Not Enough Homes, the Inventory Problem. For over a decade now, builders have not been putting up homes at rates needed to handle demand, which has created a deficit of at least a million homes. At the same time, rising costs since the pandemic have put constraints on the new construction market in areas like labor (lack of skilled laborers), materials (higher cost and shortages), lots (only about a year supply available when the market needs a 2–3-year supply), and lending (tighter borrowing market for builders). Also, fewer people are selling, for fear of having to then enter a very competitive buyer market. A survey by Discover Home Loans found that 79% of homeowners would rather renovate their homes than move.
More Buyers. Millennials are entering their prime homebuying years, many now in their 30s with children and looking to purchase a home for the first time. The pandemic has also made remote and hybrid work more prevalent, making purchasing a home in a more affordable area but further from work more attractive.
Balancing the Market. It will take a while before inventory catches up with demand. Many experts believe it will be at least 2 years before monthly inventory returns to pre-pandemic levels. Rising mortgage rates will likely take some buyers out of the market and slow the rise in prices, but remember, interest rates at or around 5% are still historically low. They could weaken demand a bit, but that may just mean that the bidding wars will be less common. Supply and demand will still be the primary drivers of where prices are headed, and for the foreseeable future, that looks to be up.
The Kolb Team
Underwriting is a process lenders follow to assess a home loan applicant’s income, assets, and credit, as well as the risk involved in offering the applicant a mortgage.
Underwriting happens behind the scenes, but that doesn’t mean you won’t be involved. Your lender might ask for additional documents and answers (such as where bank deposits came from) or ask you to provide proof of additional assets.
An underwriter can:
- Investigate your credit history. Underwriters look at your credit score and pull your credit report. They look at your overall credit score and search for things like late payments, bankruptcies, overuse of credit, and more.
- Order an appraisal. Your underwriter will order an appraisal to make sure that the amount the lender offers for the home matches up with the home’s actual value.
- Verify your income and employment. Your underwriter will ask you to prove your income and employment situation.
- Look at your debt-to-income ratio (DTI). Your DTI is a percentage that tells lenders how much money you spend versus how much income you bring in. An underwriter examines your debts and compares them to your income to ensure you have more than enough cash flow to cover the monthly mortgage payments, taxes, and insurance.
- Verify your down payment and savings. The underwriter also looks at your savings accounts to make sure you have enough savings to supplement your income or to use as a down payment at closing.
“I Could Not Be More Pleased!”
At the end of April, Jimmy Buffett performed an outdoor concert with over 800 attendees! It was a great evening of music, friendship, and fun!
Recipe of the Month
- 1Tbsp sugar
- 1Tbsp water
- 6 fresh mint leaves
- 1 oz white rum
- 1 oz Limoncello lemon liqueur
- ½ tsp lime juice
- 1 lime slice – for garnish
- To make the simple syrup: Place water and sugar in a microwaveable bowl and set on high for 10 seconds. Stir until the sugar dissolves.
- Put 4-5 fresh mint leaves in a 12 oz cup and muddle them to squeeze juice and flavor out.
- Fill serving cup with ice.
- Add lime juice, rum, Limoncello, and simple syrup. Stir well, then garnish with a lime slice and the remaining fresh mint leaves. Enjoy!
Memorial Day – How Is It Different?
Memorial Day this year is on Monday, May 30th. All of us at The Kolb Team would like to extend our respect and admiration to all veterans, currently enlisted service members, and those who have lost their lives while serving and protecting our country. It is common to mark this day with barbeques and displaying American flags, both at our homes and on the graves of fallen service members. We wanted to share with you the origins of Memorial Day and make sure you’re aware of the National Moment of Remembrance on that day, as well as other dates to honor our country’s Armed Services members.
National Moment of Remembrance
Then President Bill Clinton, on May 3, 2000, introduced the National Moment of Remembrance. At 3:00pm local time on Memorial Day, we are encouraged to take several minutes to pause – for awareness and reverence of, and reflection on – the sacrifice of those who served and were lost defending our country, its values, and everything it stands for.
Memorial Day Origins
Every year, on the last Monday in May, we observe Memorial Day. This federal holiday honors United States service members who have died serving in our country’s armed forces branches during wartime.
It was initially named Decoration Day, for the tradition of laying flowers, flags, wreaths, and other memorial items at gravesites. May 30, 1868 was the first widely-known and widespread observation of this day of remembrance, and it honored Civil War soldiers who died in battle. Grand Army of the Republic officer, General John A Logan, proclaimed that date. During this first commemoration, James Garfield (an Ohio Congressman) spoke at Arlington National Cemetery, followed by 5,000 people decorating over 20,000 graves of both Union and Confederate soldiers buried in honor there. Before this national event, local observances had been organized in towns throughout the US to honor fallen Civil War soldiers that were laid to rest in those localities. In fact, freed slaves assembled on May 1, 1865 to give proper burials and tributes to Union soldiers.
New York, in 1873, became the first state to decide Memorial Day would be a legal holiday. Before the 1900s started, numerous cities began observing it and several states confirmed it. When WWI ended, it morphed into a day to honor all who have died in wars America has been involved in, and was established as a national holiday. Still to this day, Memorial Day is commemorated by placing an American flag on each grave at Arlington National Cemetery, and the current US President or Vice President visits the Tomb of the Unknown Soldier (a monument dedicated to United States service members who were killed in battle but were not able to be brought home) to place a wreath.
Armed Forces Day / Week and Veterans Day
Yearly, the 3rd Saturday of May is Armed Forces Day (created in 1949), while Armed Forces Week starts on May’s 2nd Saturday. The difference between these two celebrations and Memorial Day is the former recognizes those who currently serve in branches of the US military, while the latter recognizes those who have served and were lost in conflicts America became involved in.
Veterans Day was originally Armistice Day, and is observed on November 11th every year. On this date in 1919, the 1st anniversary of WWI ending was celebrated. In 1926, Congress passed a resolution making this date an annual observance, and in 1938, it became a national holiday. Veterans Day marks respect for any and all-American Armed Forces veterans, whether they served during wartime or peacetime.
- Buyer from Colorado looking for a 2 BR Villa / Townhome in Sun Lakes.
- Buyers looking for a 2 BR + den with a nice yard and a Casita. Pool ok.
- Buyers looking for 2 or 3 BR single level with at least a 2.5-car garage.
- Buyers looking for 2BR + den with a golf course or green belt view. 2.5-car garage preferred.
Recent Real Estate Sales in Sun Lakes
Wondering about your Neighbor’s Home Sales Price? Find out here to see what sold last month. The report is broken down by HOA, address, and floor plan (if the agent listed the model in MLS).
Pet of the Month
Congratulations to our Pet of The Month… in this case pets, as we couldn’t leave a sister behind. Meet Molly and Lulu! We know they’ll enjoy the goodies bought with our gift to them a Chewy gift card!
If you would like us to feature your pet in our Pet of the Month series and be entered into our monthly drawing for a Chewy gift card, all you have to do is a send us a picture and a little bit of information about your pet to email@example.com.
Vendor of the Month
Off The Deep End Pool Service
It’s that time of year again… to get your pool in tip-top shape for the summer! Off the Deep End Pool Service provides regular maintenance, any repairs needed, and renovations. The company has been in business since 2008, and is licensed, bonded, and insured. You can visit their website or call 602-920-3409.