Okay, so they market has SHIFTED. Have you heard? Of course you have! The amount of buzz and panic we have been discussing with many of you is at an all time high. Here is the main question we are seeing, are we back in a 2007-2008 market recession? Here is our short answer, no. However, lets look at it and break it down a big shall we? ;)
The first thing we have to know is what exactly drives the real estate market? It’s really pretty simple, its supply + demand. Pretty simple! Now that we know that, we have to look at our inventory. Here in Lubbock we are still just at 1.5 months of inventory, meaning that if we sold everything currently on the market without anything new coming up, we would be out of homes to sell within a month and a half! Secondly, we have to know who is buying these homes?! Most buyers are between about 25-35 years of age, or simply put our millennial generation. Did you know there are about 5 million more millennials than there are Gen Xers who were the primary buyers in 2007-2008? You read that correctly, FIVE MILLION.
There are plenty of buyers!! The market is still moving! The last thing we need to talk about is lending. In 2007-2008 there were many lending issues. Mostly they were practicing a lot of subprime lending, meaning they were lending to folks who really shouldn’t have been approved for a home loan. Lending practices have changed so much that this is not a grave concern at this time.
So why has the market shifted? What’s changed? Frankly, the market shifted because it needed to shift. The most notable changes that our clients are obviously noticing is the rise in interest rates. This of course directly affects our clients. Though they have gone up, they are still historically low. However, this has meant that many buyers have had to adjust their budgets a bit. Because they will be paying more in interest they cannot pay as much as previously expected in principle, which is obviously upsetting to many buyers.
However, from our end what we see is positive. Buyers are no longer having to drain every dime they have saved to pay 20-30K over asking price. Sometimes we are even seeing some closing costs being covered from the sellers. Appraisals are being done and honored. It is a market that we feel SO GOOD about. We want our buyers to walk away knowing they made a wise investment, and have reserves for anything that may come up!
Navigating a new normal after the feeding frenzy of 2020-2021 is not easy. However we are committed to staying on top of all the learning for you. Please reach out to our team with questions! Our YouTube Channel also has a video that may go a bit into more detail that we linked to the photo above!
