The Advisor July 2021
Are we in a housing bubble? This question continues to come up in almost every conversation I have with a friend, client or person waiting in line for their Starbucks. To answer this question, first let me take you back to 2008, a time that left such deep scars with so many. In 2008 the housing market actually had an abundant supply of homes that took months, if not years, to sell. During that time frame there were too many available homes compared to the amount of demand the market generated. In addition, banks and mortgage institutions were giving out NINJA loans (No Income, No Job, No Asset Loan). This subprime mortgage market took over and completely failed the American people. We had much higher interest rates (6-7% on average) during this era and many people were fooled into what type of loan product they were actually purchasing. You could say it was greed or just corporate irresponsibility, but it really has no reflection on the market we are in today.
Let me explain why the market we experience today is the complete reverse of 2008. Today we have well qualified individuals who have more cash to put toward their home purchase. In fact, more than half of home purchasers today are putting more than 20% down for their home purchase. The inventory situation is completely inverted as well. We do not have enough supply of homes to fulfill the demand needed right now. As a result, the prices have shot up. Those looking to sell and make a move up purchase are fairing best in the market today. They are benefiting from compounding equity in their current asset to place more money down on a much larger home with lower interest rates. Additionally, home builders stopped building during the great recession and currently they cannot build homes quick enough to keep up with demand.
I can see how easy it is to think that we are in a housing bubble due to the sky high prices and the crazy multiple offer situations you hear about at all the outdoor gatherings we are finally able to participate in. Truly, economists and experts find it very difficult to forecast anything close to a housing bubble or any similarities to the one experienced in 2008. Part of my job is to analyze the history and understand the market conditions today. By doing this, I can provide optimal value to those I have the honor of assisting during their largest asset purchase. Without question, today is one of the best markets we have experienced in our history. Minus any major catastrophe or lingering pandemic aftershock, we might only be in the 5th inning of this dramatic housing ballgame. Those looking to sell and make a move-up purchase are fairing best in the market today. They are benefiting from compounding equity in their current asset to place more money down on a much larger home with lower interest rates. Additionally, home builders stopped building during the great recession, and currently, they cannot build homes quickly enough to keep up with demand.
Exclusive Listings:
8161 33rd Ave S. #201 - Bloomington 1 Bed | 1 Bath, | 1 Garage Stall Offered at $269,900
301 Oak Grove Street #205 - Minneapolis 2 Bed | 2 Bath | 1 Garage Stall Offered at $350,000
5801 Drew Ave S. - Edina
4 Bed | 4 Bath | 3,289 sq. ft. Offered at $1,099,999
Whisper Listings The Ryan Pertile Group has a number of exclusive listings being prepared for the market and if you are interested to learn more about what is coming available in the near future let’s connect. We are committed to providing a bespoke real estate experience every way possible in today’s transactional focused market. #whoyouworkwithmatters
Buyer Advocacy: Western Suburban Townhome Villa Approved up to $600,000 3-4 bedrooms, 2+ bathrooms, 2,500+ sq. ft St. Paul - Summit Ave Neighborhood Move in ready up to $700,000 Minimum 4 bedrooms, 2 bathrooms & 2 car garage Would consider a fixer upper for less. Western + Northern Detached Townhome Newer construction preferred Approved up to $750,000 Updated or recently renovated Downtown River or City Views Mill District Preferred Approved up to $1.75M MacGroveland / Highland Classic style home with character Approved up to $500,000 Minimum 3 bedrooms, 2 bathrooms & 1 Car Garage
Current Market Stats New Listings = +2.3% Closed Sales = +11.4% Average Sales Price = +10.9% % of Original List Price = +2.0% Avg. Days on Market = 37 Days Inventory of Homes For Sale = -47.1% Month Supply of Inventory = 1 Month
*Citation: “Monthly Indicators” by Minneapolis Area Association of Realtors, May 2021
RYAN PERTILE TELEPHONE +1 612-805-0059 E-MAIL RYAN.PERTILE@EVREALESTATE.COM ENGEL & VÖLKERS MINNEAPOLIS 1601 HENNEPIN AVE • MINNEAPOLIS • MN 55403