Bubble? What Bubble?

Here at Lakeshore, we keep hearing the same question from our friends, family, and clients: “Are we in another housing bubble?”

It is a question that seems to be on the tip of everyone’s tongue and is typically answered with polar opposite views depending on who you talk to. One camp is seeing rising home prices as an indicator of another impending collapse. The other would call this resurgence a recovery rather than the last tick on the doomsday clock.

So who do you listen to? Do you sell all of your property, build a shelter and bury your cash? Or do you sit tight, enjoy the equity in your home and watch the neighbors bury their valuables in the backyard?

“In times like these, the value of working with a local and experienced Realtor is truly apparent. Incline Village is our home, and we know it inside and out.”

Let’s first look at what led to the housing market collapse. To put it simply, the housing market was propped up by bad loans that began to fail and caused the bubble to burst. The artificial demand disappeared and home values dropped to the floor.

Now let’s look at current market conditions: Two factors separate this recovery from the housing bubble and crash of 2007-2008. First; the inventory of homes for sale remains low and is logically driving up prices. During the previous housing bubble, demand was driven by the availability of credit rather than a restricted supply of homes. Secondly, the buyers that are driving this demand are actually qualified to buy a home.  The average FICO score of an approved mortgage in 2005 was 660. Today, that average is 762.

These differences between the housing bubble and today’s market have underlined Lakeshore’s opinion on the market. The housing market will continue to ebb and flow as all markets do. However, the fears of another devastating crash look to be unfounded.

In fact, we are seeing a strong increase in condominium sales, remodels and flips here in the Incline Village market. Investors are taking advantage of their Realtor’s local knowledge and are making smart investments all along the North Shore. This investment is a strong indicator of a healthy real estate market and looks to continue into the near future.

Thinking about investing? Stop by today and pick up a detailed buyers package. The more information you have, the better decisions you can make!

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