Answers to Your Top 3 Real Estate Questions

Hello again everyone! There are some real estate questions that are evergreen such as “How do you buy a home?” “How do I sell my home quickly?” and “How do I get the most money for my home?”. Then there are questions that pop up due to the current state of the market. Today’s blog is going to give you the answers to your top 3 real estate questions right now. These are questions that we are getting repeatedly because of the crazy state of the market in 2021 and therefore are very relevant and mandatory to answer right now.

Because we want to provide content to you in as many ways as possible so that you can find what works best for you, you can watch the video on our YouTube channel above (Don’t forget to subscribe to our channel so that you don’t miss any future content!), continue reading our blog below, or if listening is more your style, you can hear it on our MI Home Team podcast by following this link!

The top 3 questions we are being asked are

1. Are we in a bubble and is the market going to crash?
2. Is there going to be a flood of foreclosures that will hit the market?
3. What will the market look like in 2022?

Are we in a bubble?

Very easily, the answer is no. To be more specific about it though, the market today is very different from the market of 2008. Back in 2008 lenders would give a loan to absolutely anybody and would be rewarded for unethical business practices. Today, there is all kinds of legislation set up to prevent this from happening again.

Another reason that we don’t have to worry about the market crashing is because people today have a lot of equity in their homes unlike 2008. Back then, people would take out almost all of the equity in their homes to use on frivolous purchases like cars, boats, vacations, etc. This is one of the main reasons that so many people were underwater on their homes. Today, however, home equity levels are at an all-time high, averaging $153,000. Last year alone, the average homeowner gained over $50,000 in equity (That’s just in one year!). So people have options if they get into trouble on their mortgage. They have the option to sell now and, since the market is so amazing for sellers, homes are selling, not sitting there forever.

The reason that prices skyrocketed in 2020 and 2021 was simply because of supply and demand. A lot of first-time homeowners entered the market after being stuck in little apartments during quarantine. Meanwhile, many existing homeowners were nervous about selling because they didn’t want someone bringing Covid into their home. They were also nervous that they wouldn’t be able to find a new home with things the way they were. Inventory levels were at about half what they were pre-covid and yet the number of buyers looking was drastically higher. So what happens when you have a lot of demand and not a lot of product? Prices go up. So have no fear! Your investment is safe!

Will there be a flood of foreclosures?

Sorry investors, while there inevitably will be a few foreclosures, there will not be a flood of them. We already talked about homeowners having the option to sell so I won’t go into all of that again, but even if every loan in forbearance were to hit the market, the market would be able to absorb them because our inventory levels are so low. That would create a more balanced market, not a crisis. So you don’t have to worry about that one either.

What will the market look like in 2022?

As of right now, the inventory levels are still frustratingly low, but lower inventory is common in the winter.

The market is cooling off now, in part because mortgage rates are now back to their pre-covid level and it is expected that they will continue to rise throughout the year and is estimated to go as high as 4.5%. Home prices are also expected to rise this year at about 5% which is what a stable and typical market will produce.

There will still be a decent amount of competition and be a seller’s market, but as the year progresses, much of this is expected to iron itself out.

So what does this mean for sellers? 

If you are wanting to sell your home, now is a great time to do it while inventory levels are low in order to get the highest demand for your home.

And what does this mean for buyers?

While things are still a bit crazy, it will get better. Hopefully, you locked into a low rate (but let’s be honest even if you didn’t, historically speaking rates are still great). Hang in there this year is going to be a lot better for you.

The important thing is to remember is that your real estate investments overall should be safe (unless you bought land on top of a toxic dump or something like that), interest rates and home values are rising so buying sooner will save you money vs. buying later, and finally, it’s going to be okay, this should calm down soon.

I hope this helped to provide answers to your top 3 Real Estate questions! Be sure to check out our other blogs including the January Housing Market Report for Washtenaw County.

As always, if you have any additional questions, feel free to reach out to us! We’re always happy to help!

Have a great day!

Chrissy Myers

MI Home Team