The Non Existent Housing Bubble

As the market gets more and more crazy I’m hearing more questions and concerns about a market bubble.  I’ve addressed facets related to this in previous posts but let me take those concerns on in a comprehensive fashion right now.  In the Northern Virginia region a bubble is just not happening, certainly not this year.  Other parts of the country are definitely more vulnerable to one (because of excessive appreciation and shakier employment numbers) but not in these parts!

Factor #1:  Prices rose last year about 9.8%, which is very healthy but not ridiculous.  It’s admittedly not sustainable over a 4 or 5 year time horizon before affordability becomes an issue but we’re not even in the top 25 of markets nationally for appreciation.  Prices are rising strongly again to kick off the new year.

Factor #2:  Interest rates are still down from a year ago.  So as prices have risen affordability has not taken a big hit.

Factor #3:  People have jobs! (and good ones at that).  Unemployment in Fairfax County is around 5%, with most of the adjoining counties looking at similarly low numbers.

Factor #4:  There is no distressed market in this region to nuke the market and there is not one coming.   A full 86% of homeowners have at least a 10% equity position in their homes.  That means if they get in trouble they have enough equity to just sell.  There are only 6 foreclosures and 6 short sales in the entire region!

Factor #5:  Continued historically low inventory levels.  There is an enormous amount of unsatisfied demand.

So fear not.  It’s still a great time to purchase as this market has plenty of legs left in it, and it is of course the catbird seat for home sellers right now.

Call me no matter what your real estate needs are and we’ll get you taken care of!

It’s a good life.