Gearing Up For A Shift

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September 7, 2016 by Jeff Lowen

Many of the thought leaders in the real estate industry are calling our attention to a shift in the market. Many beg the question, “Is the Current Pace of Home Sales Sustainable?”

Good question.

This is questioning whether the current pace of residential home sales is sustainable. Are too many people buying homes like in 2004-2006? Are we headed for another housing crisis? Actually, if we look closely at the numbers, we can see that we are looking at a very healthy real estate market. Healthy for now, anyway.

Why the concern?

Some are looking at the last three years of home sales and comparing them to the three years just prior to the housing bubble. Looking at the graph below, we can understand that thinking.

Is the Current Pace of Home Sales Sustainable? | MyKCM

However, if we go further back in history, we can see the real picture. After taking out the “boom & bust” years, the pace of sales is growing at a quite natural pace.

Is the Current Pace of Home Sales Sustainable? | MyKCM

And new home sales are way below historic numbers. Trulia’s Chief EconomistRalph McLaughlin explains:

“Adjusted for population, [new home sales] are at about 63% of their fifty-year average level—way better than 2011, but nowhere near heated.”

The moral of the story…

The current pace of residential home sales definitely seems sustainable. Let’s go one further and look at an even bigger picture…

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Do you see a constant growth in the values of housing? Do you see a bubble around 1979? 2006? Can you predict where the market will go? Does having more houses, more people, more new builds, and more transactions affect the frequency at which a bubble might occur? Or will our growth in population, and the sheer volume of housing in the current and future market dilute the potential hazards of a hard shift and POP! goes the market?

Truth be told, and especially in this election year, if our new president is a republican the market just might… Or if our new president is a democrat, the market will surely…

Yes, the answer to this age-old question about how and where the market is going is the same: It depends…

It depends on what your situation is, what you’re trying to accomplish and your necessity to work with a seriously competent professional to better suit you to maximize your opportunities in whatever the market is at the moment.

Here’s how I can help you…

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