Is the real estate bubble burst soon?

[Leatha L. Luttrell]

So I am seeing and hearing a lot of chatter about the coming burst. Do you really think it’s coming soon? If so when? Do you see it affecting Florida terribly?

[Jenni Utz]

Hi @Leatha this is a great question. And one that should be answered in a couple parts. Last year many were predicting some level of real estate shift. If you look at history trends we are overdo for a dip. In a buyers market you normally see more than 7 months of real estate inventory. For a Sellers Market you see less than 5 months of inventory. A neutral market is around 5-7 months of inventory. Currently, (at least in Maryland) our inventory is 1.9 months. This is an astounding number. There are more people looking to buy than there are houses for sale. If you look at these numbers alone, we are definitely in a sellers market. Houses are going for higher than list price and selling in record time. 

However, to add in the factor of Covid, AND the fact that we are overdo for a housing dip, it will be interesting to see what happens in the next several months. This is the time that the lump payments will be due on mortgages that were paused during Covid. That means people will need to come up with the FULL amount due from the past 3-4 months of payments (unless they worked out a payment plan with their lender). If people haven't properly saved, this could cause a large number of properties to go into delinquency and possibly foreclosure. 

The one thing I know for sure, is that when the housing market takes a dip, even during the recession of 2008, our property management/investment company did well. And the reason for that is people still need a place to live. So if properties are foreclosed, and those owners need to find somewhere to live, they will be looking at rentals. In my opinion, if you aren't on the high end or low end of the rental spectrum, you will fare well. On the high end, those tenants may choose to downsize, and on the low end, those tenants may move in with family/friends. In the middle is where you will pull the greatest target market for rental prospects. 

If you properly plan for the next dip, you will be ready to invest in additional rental properties, and find amazing deals!