Given the continued rise in interest rates and the growing public concern over other market trends, many people have asked me recently about whether our local market is in a real estate bubble.
The short answer is yes, but this doesn’t tell the whole story of what’s happening in our market. To really understand what’s going on, we’ll need to take a look at how real estate has changed lately on a local, statewide, and national level.
The first statistic we need to consider is the rate of appreciation. From looking at recent reports, it’s apparent that homes are not rising in value as quickly as in the recent past. Appreciation for homes here in Redding was at just 0.6% in Q3 of 2018, for example. And the appreciation rate for all of California during that same quarter was also relatively low, at just 1.07%.
To put this into perspective, states like Idaho and Nevada saw appreciation rates up to 15% during 2018’s third quarter.
But, with that said, the drop in appreciation is just one contributing factor behind the current bubble. Other major influences are the tragic wildfires that destroyed thousands of homes in November, 2018. In the wake of disasters, the demand for property skyrocketed, with those who had lost their home scouring the market for replacements.
In short, this high demand, coupled with our currently low inventory, has absolutely played a significant role in the current state of our market.
So what does this mean for you? Well, if you’re a buyer, you’re likely to face high levels of competition—particularly in the $300,000 and under price range. Sellers, meanwhile, can take advantage of today’s low supply. It’s a great time to list.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon!