My team often faces people who say that they are “waiting for the housing bubble to pop.” That’s not happening anytime soon, and here’s why… It’s my Granddaddy’s fault.
My Granddaddy was part of the Greatest Generation; born in 1914, overcoming the Depression, surviving WWII, and returning home to do what most servicemen did – conceive Baby Boomers.
My dad did exactly the same thing – along with most of the rest of his generation, starting families in their early 30’s.
This correlates to the rise of mortgages in the early 80s, and peaking in 1985. I was born in 1984 and I’m one of the first Millennials.
What we have seen in this country is that historically American family units begin in the early 30s age range. This means that we historically see housing bubbles when the majority generations start families, and this has correlated to the 1950s, the early 1980s, and now.
Ask any Realtor and they will tell you it began to be a “great time to sell” about 2017. Ironically, this is when those early Millennials started to hit their early 30’s, and began to settle down and start their own families. A lot of people believe it was low rates that are driving the housing bubble, but we forget this most recent boom started when rates were HIGHER than they are now!! Millennials are the only generation to rival Baby Boomers in size, and they want houses. And after all, like it or not – Millennials are known for getting what we want. The Millennial generation goes till about 1996, so if history is any indicator, we have another five-six years of housing demand, based on family growth demand alone.
What about the rates?
The recent drop in mortgage rates has only fueled the demand for housing. Families are able to afford more house for the same monthly payment, and when demand goes up – so does price. Even the most conservative estimates anticipate a 4% increase in housing in 2021, with some estimates closer to 7%. And despite what the media says, income is up for Millennials – who were comfortable working from home well before the pandemic.
Rates likely will fluctuate some, but it will be a bit before we see a major increase in interest rates.
Could prices go higher?
There is significant reason to believe that prices will continue to climb – we discussed demand, low rates and there is also low inventory nationwide. But in addition to these issues, there is discussion about more stimulus and a $15,000 home buyer credit. Were there to be this credit, you can safely assume that prices will match the increase in demand, shooting them higher.
What does this mean for me?
We are pretty transparent that we give the same mortgage advice we take. Were you to peruse the public records, you’d notice my name attached to investment property purchases, and hopefully by the time you’re reading this, my home will be for sale and we will have secured a new home. I believe what the data shows is home prices will continue to climb and rates will not go to the negative, but can only stay this low for so long.
If you would like a personal mortgage plan to help your family build wealth, reach out today for a virtual or in-person appointment.
-submitted by Ross Mortgage
About the Author: Matthew Stevens serves as Branch Manager of Ross Mortgage in Glasgow, Kentucky. With a belief of equipping families to build wealth through homeownership, his team serves families not only in Kentucky, but also in Tennessee, Ohio, Indiana, Louisiana, Georgia, Florida and North Carolina. Call or text Matthew at 270-629-5041.
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