Bubble Trouble or Gradual Slowdown?

The consensus seems to be, shared by real estate economists, is the latter, gradual slowdown. Taylor Marr, of Redfin, concedes there are some signs of overheating, while Rick Palacios, from John Burns Real Estate Consulting, sees a “high risk, high reward,” scenario. All economists seem to agree on the one thing allowing for a soft landing and correction; proper vetting for loans and consistently stringent loan qualifications and underwriting standards, whether private portfolio lenders or Fannie Mae, FHA, or other government backed loans.

Another reason for no bubble optimism is that most people are not treating their homes like ATM’s this time around. Although there is an increase in refinancing, many are rate and term only, with no cash out. Another article published at the beginning of May, in the OC Register, suggested up to 1 in 6 homeowners may be thinking of selling in the next 18 months. That’s roughly 17% and could ease current inventory shortages. The tight market is not likely to be helped much by builders as they look at shrinking profit margins, higher labor costs, rises in material costs, and post pandemic backlog. Optimism remains for many in this market.