Though most will agree that housing availability and affordability are current issues, there are varying opinions on whether we are in a housing bubble, and what can be expected of the market. A housing bubble, or real estate bubble, is a run-up in housing prices fueled by demand, speculation, and exuberant spending to the point of collapse. Housing bubbles usually start with an increase in demand, in the face of limited supply, which takes a relatively extended period to replenish and increase. Speculators pour money into the market, further driving up demand. At some point, demand decreases or stagnates at the same time supply increases, resulting in a sharp drop in prices—and the bubble bursts.
“Everyone is trying to guess the market,” said Denice Waybrant, ERA Brokers. “But one thing I’ve learned in over twenty years in real estate, houses always, always, always appreciate in value given enough time. Everyone is trying to guess the market, and trust me, I wish I had a crystal ball to see what was going to happen, but I personally don’t believe we’re in a housing bubble.”
She said the last housing bubble occurred in part because loans were so easy to get; financing was given to practically anyone who asked, and homes didn’t gain in price values. Now, however, things are different. In a good, robust economy in our area there are typically 150 houses on the market; currently, there are two single family residences for sale in North Sevier. She said it is very, very true that when covid hit people discovered that they could work anywhere and homes in our area became highly desirable.
“We’re used to seeing people come here to retire,” she said. “It’s been the trend that we raise our children to leave- we export our children to places with desirable jobs, then, if they’re lucky enough they can ‘come home’ to retire. Now, people are realizing that they can still make a living here and they’re selling their homes in California or Las Vegas, for example, and coming here to buy and their cash is beating out a lot of buyers.”
She said, for example, there are three houses on the market here. The newcomer finds the perfect one for them, and though it may be a little overpriced, they are able to sell their previous out-of-state house for a good profit, and using that cash, purchases the home in Sevier County. Because they are using cash rather than a mortgage, the home doesn’t have to be appraised and that home, purchased at a higher price, establishes a higher value and becomes a ‘comparable’.
“This home owner thinks they’re getting a bargain because the home they purchased for $250,000 twenty years ago is selling for $750,000 now, so that $350,000 they’re able to buy here, with cash, is a bargain,” said Waybrant. “And that is what is working against us. The comparables, which are selling at high prices, gives justification for the next overpriced house.”
She said a lot of people are waiting for the market to crash so they can swoop in and get a cheap house, but from what real estate markets are indicating, that’s not going to happen.
“The banks not going to foreclose on a bunch of houses,” she said. “There are a lot of people waiting for prices to come down, and there are a billion reasons it could, but as we say in real estate, the best time to buy real estate was twenty years ago, and the second-best time is right now. Prices are always going to go up, whether that is fast, slow, or constant.”
She said everyone must consume real estate either through renting or owning. Renting is tough, especially right now, because renters are always being told where they can live and how much they’ll pay to live there. Many rental property owners have chosen to sell and take that equity and invest it elsewhere, forcing renters to find new living spaces.
“The thing I would like people to realize is that you don’t buy real estate based on what the market does. You buy real estate when it works best for you,” she said. “You’re a homeowner, not an investor. People should always be working towards homeownership and understanding what’s best for you and your family.”
She encourages everyone to fix their credit if it needs fixing and be ready and prepared to figure out how to make home ownership work for you. If an elderly relative died and the family decided to sell that home, it would be a missed opportunity if you were in no position to buy it.
“Be proactive,” she said. “Don’t sit on the sidelines or you’re going to miss out. “Understand your credit and what it takes to buy a house. It’s difficult right now, but it can be done. There are numerous loans out there that require 0% down, that are not low income, VA loans, Utah housing, etc. They’re based on the number of people in your family and the amount of money you make. Family can also gift you a down payment. There are a lot of creative ways and it is possible.”
Another thing Waybrant emphasized is that it’s important to understand debt to income ratio and to prioritize their money- you can have the house and the nice truck and the four-wheeler and trailer and everything you want, but just be smart with money.
“Make decisions on what you want most,” she said. “Anyone can get into a house. It’s not easy, but it’s doable. Just be smart with your money.”