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Is This Real estate Bubble Going to crumble again?

9/10/2015

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Today I was asked for my opinion regarding the prediction going around that our real estate market is going to crumble because we are in another real estate bubble. I have been asked about this 3 times in the last 2 weeks and I think this prediction is totally unfounded. Let me share with you why.
In the real estate bubble of the past, renting was far cheaper than owning. A $300,000 home could be rented for $1,000/month. Today, this is not the case. The values and appreciation we have enjoyed the past 3 years are tied to rental values. To rent an average - not special - 3 bedroom 2 bathroom home in Clermont, you will have to pay $1200-$1400 per month. This rent payment is equal to the the mortgage payment, if not higher, for a home of similar size and quality. Renters are choosing to become owners again because they are already paying high monthly rental amounts and it just makes sense for them to own the house. This means buyer demand is greater than seller supply and thus our 40-50% increase from the bottom of our market over the past 4 years.
If our home values were to begin to crumble again, renters will be diving into ownership faster than ever and investors will re-engage the market because owning will be much cheaper than renting. If owning became cheaper than renting again, values would go back up because the demand would end up being greater than the supply. As I see it, the values we are enjoying are more permanent because rent is so high and that is not going to change for a while. I actually think we have room to appreciate just a little bit more next spring, but interest rates will determine whether or not that happens. After that, I think we are in for a long steady time of flat to modest appreciation.

I would love to tell you more if you are interested. Call me. We'll talk it up! 407-267-2312

​Matt Mobley the REALTOR®

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1010 East Ave Clermont, FL 34711
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