I have two theories about what’s happening in our market right now.
We’re coming to you from high on the hill to talk about the possibility of a market crash. We get asked all the time if this is another housing bubble. The market feels bubbly, right? But, we have two theories that cover what might happen. Let’s go over them:
Theory No. 1 is that this thing crashes. It’s very simple. This market feels like 2005 to a lot of people. We’ve seen stratospheric increases in home values; prices are rising too much, too quickly. 4% to 5% appreciation per year is normal. Guys, we saw 30% appreciation in Washington County in the last 12 months. Iron County and Cedar City saw the same thing, and we had 15% and 12% appreciation in the years before that.
Home values in Washington County are up 100% since 2016. Your $250,000 home in 2016 is now a $500,000 home five years later. We’re so used to it that we don’t even notice it. Theory No. 1 is that there’s a massive crash; it’s 2007 and 2008 all over again.
Theory No. 2, which I’m leaning toward, is that the “bubble” that has been blown gets a pin hole in it and the market stabilizes. The difference between now and 2005 is that buyers are either paying with cash or thoroughly qualified for their home loans. There are still some folks buying sight-unseen…actually MANY are doing so because they can’t physically get here quick enough to win the bid. But they aren’t just buying flippantly like we saw in 2007.
Lastly, let’s talk about California. They have some lovely things like the beach and Disneyland. My videographer is here from California, but he’s planning to move to Texas because California also has forest fires, burning cities, oil spills, and a failed gubernatorial recall! There are reasons people are leaning. People will continue to leave, and they’re going to go right up the interstate to our town, which supports theory no. 2.
Meaning we DO NOT foresee a market crash. If you’re a Buyer waiting for prices to drop significantly, I’m not sure it’s coming. What’s your theory? Crash or no? Bursting bubble or just “blowing” a bubble? If you have any questions about our theories or real estate in general, don’t hesitate to call or email us. We’d love to hear from you!