Real Estate Bubble?
Are We In A Real Estate Bubble?
I love all kinds of bubbles. Champagne bubbles. Bath bubbles. Real estate bubbles. I missed out on the last real estate bubble in the early 2000's. I had just gotten into real estate right when it popped in 2007 and it was the best time to buy. I was buying up houses for $17,000 and $21,000. No kidding!
As I write this, people are currently asking, “Are we in a real estate bubble?”. The short answer is Yes. This is like something that I’ve never experienced before in the 15 years that I’ve been doing real estate. Houses are selling fast with multiple offers above asking price. Also, it appears to be pretty much nationwide USA.
My first house flip in 2007
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Recently, my friend sold her house in California in 2 days. She had over 45 showings and 10 offers in one weekend. They accepted a cash offer over $200,000 above what they were asking for. This was a $1.2 million dollar cash offer!
We recently listed a house for sale in NJ. In four days, it had 5 offers up to $70,000 above the asking price. I know what you’re thinking. What about the appraisal? Buyers are actually waiving the appraisal contingences to get the offer accepted.
How did this happen?
It’s the law of supply and demand. It has a lot to do with Covid, people working from home, home schooling, and relocations. Buyers realized throughout quarantine that they needed more space. Interest rates are at a historic low. So they want to trade up while they can get houses at cheap rates.
But, less sellers are listing their houses for sale for fear of people coming in and out with Covid. So the supply is low, but the demand is high. Plus, there’s a lot of people that appear to be relocating since they are telecommuting and/or homeschooling, then they can pretty much work from anywhere.
A Little History
The first known bubble is said to have taken place in the 1600’s in Europe. It is referred to as Tulip Bulb Mania. It marks a time in history when the price of tulip bulbs (yes, we are talking about the flower) went up dramatically due to speculation.
Tulip bulbs were trading for hundreds of dollars in cash and people were buying them up like crazy. Some people even mortgaged their homes to buy tulip bulbs and tulip bulbs were selling for the price of homes. In 1637, the tulip bubble crashed and people lost their fortunes almost overnight.
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Where To Go From Here?
A good investor can find great deals in any market. It’s a perfect time to sell. History repeats itself and all bubbles eventually burst. My prediction is that eventually interest rates will go up (they are already starting to), which will cause the bubble to burst. When that happens, then be prepared to buy!!! Prices will go down like they did in 2007. Almost all bubbles result in a transfer of wealth. The question is: Will you be prepared for it?
Welcome to Hey Rich Girl!
Hey girl! I'm Cynthia Cuccuini, a self taught real estate entrepreneur. I've been flipping houses, landlording (Is that even a word)? and designing homes for over 10 years. Come along the journey as I educate entrepreneurs how to invest in real estate.