LEESBURG – The the real estate market is hot right now, maybe even too hot.
But how long will it be before the hustle and bustle in home sales slows down and simmers?
Some economists are predicting a drop later this year.
The Mortgage Bankers Association has already reported a 17% drop in loan applications in 2021 compared to 2019 in the week ending June 25, and applications have fallen 6% from the previous week, according to the Market Watch website.
Experts: many factors play a role in the boom
One of the reasons for the recent sharp rise is that many buyers are paying cash, paying more than the list price, and skipping loan and appraisal requirements.
It is also more difficult to obtain loans than before.
Stricter regulations were imposed on lenders and borrowers, following the real estate crash and recession of 2008.
“Lenders were creating loans for people who couldn’t afford them,” said Doug Hampton of BNB Realty.
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The small home inventory will also cool things down, experts say.
The month’s supply in Lake County fell from 2.5 to 0.7 in May, according to Florida Realtors.
Another factor is interest rates. They are currently low.
The Federal Reserve bought billions of dollars in mortgage-backed securities to support the economy. This allows banks to lend more money, which stimulates the economy.
“The concern is that if the Fed stimulates the economy too much, especially the housing market, it could lead to a housing bubble, where house prices rise rapidly and then fall rapidly,” Gus Faucher, chief economist at PNC Financial Services Group told MarketPlace.org.
“We are not there yet,” he said in the June 28 article.
Building materials also play a role
A shortage of building materials could also slow things down. The federal government will also have a role to play in this regard.
“If the trillion dollars [federal] The infrastructure package is adopted in America, who knows where the steel will come from to build these roads and bridges, ”wrote Don Magruder, CEO of Ro-Mac Lumber and Supply and columnist for the Daily Commercial.
President Joe Biden has announced his support for the bipartisan $ 1.2 billion program.
“The price of rebar and foundation mesh has almost doubled, and the plates for making roof trusses are now in stock. You might have a harder time getting roof trusses later this summer, ”Magruder said.
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It apparently didn’t affect The Villages. Sumter County building officials said the mega developer was getting 17 permits per day, up from 15 last year. Construction of homes on the 1,100 acres she bought from the town of Leesburg last year could begin next year.
Higher local property taxes could also come into play.
“My job is to assess value,” said Carey Baker, appraiser for Lake Property.
He doesn’t like the idea of increasing values and therefore taxes on people’s homes, but he has to look at the sales numbers.
“I hope things get back to normal,” he said, “and I will look at the numbers for the last quarter to see how things turn out.