Colorado Group Realty Insider - May 2021
"When is the bubble going to burst?" is a common question these days and
it's easy to see why: Active inventory is down, prices are skyrocketing, and
demand is fierce. Although overall inventory on the national level grew slightly
since last month, there is still a huge supply shortage. So, is this a bubble that
is about to burst? Many experts seem to agree that the answer is "not any time
A "bubble" is a rapid increase in the price of an asset followed by a swift decline,
which is what happened back in 2008. Here is an oversimplified version of
what occurred: Banks were giving loans to homebuyers very liberally, many of
whom took on more debt than they were qualified for. These lending practices
created demand for those wanting to get in on the action of rising home
values (a bubble) even though there was an oversupply of housing. When
homebuyers could not make their loan payments, banks foreclosed, and
the value of the home was then lower than the amount of the outstanding
mortgage. The result? The bubble burst and home values plummeted.
Today, experts think things are different. Generally, six months of supply of
real estate is considered a balanced market. If there is more than six months of
supply, it is considered a buyer's market; less than six months, a seller's market.
In 2008, nationally, there was more than eleven months of inventory. Now,
nationally, there is 3.4 months. In Steamboat, there is a measly 1.2 months of
Also, lending restrictions have tightened greatly since 2006-08. This time
around, demand is real, not speculative. Gen X and Millennials are coming of
age, buying homes, and starting families. The capacity for remote work and
the COVID inspired focus on quality of life have increased demand drastically.
When supply is low and demand is high, prices rise.
There is good news among all of this: If you already own a home, you have
likely built a tremendous amount of equity and could be well-positioned to
make a move. The median sale price in Steamboat is now $930K, up 35% from
this time last year. Our creative and experienced agents can also help decisive
homebuyers in this competitive market. If you're searching for or considering
selling a home, our agents can offer expert guidance. Call us at 970.870.8800.
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