Many have speculated that we’re in a bubble and it’s about to burst. This has been going on since last May, when the market roared back to life after a couple months of lockdown. Probably safe to say at this point that this market is here to last. At least until sometime next year. Or maybe longer.
There are several reasons why this current nutty seller’s market is the way it is, but the biggies are:
- Record low interest rates that just. Stay. Low.
- Builders who haven’t been keeping up with demand after the actual 2008 bubble burst
- Boomers staying in homes much longer than previous generations
- Millennials aging into their prime household-forming/home buying years.
In short, not enough homes + too many qualified and hungry buyers! A market is considered “balanced” when supply is around 5-6 months.
The last time that happened in the Puget Sound area was between 2012-2015 (see below). This tide isn’t going to turn overnight. The hectic bidding wars may subside, but until interest rates rise and/or supply increases and the increase is sustained, it will continue to be business as “normal”.
While the uptick in inventory is encouraging, it will need to last a lot longer to have a real impact.