Is there a housing bubble forming in Daytona Beach? Many home buyers are questioning this due to the high demand of housing and the apparent low inventory. What is causing this enormous demand and can the market sustain it? Is it occurring due to the Pandemic?
A housing bubble is defined in the article by the Buyers Agent of East Florida as "an increase in housing prices fueled by demand, speculation and fervor in the market. Bubbles normally begin with an increase in housing demand, usually accompanied by a very limited supply. When speculative housing investors enter the market it further spikes demand, which increases prices even more." There are many who debate that even though it appears we are trending towards a bubble, that this is not the case. Housing prices are on the rise everywhere, not just in Daytona. Several systems are in place to prevent the bubble. One of which is housing loans are not distributed as easily as they were back in 2007.
Even though mortgage interest rates are hitting record lows and many more people can afford housing, loans require more stringent criteria than in the past which prevents loans being given out without proper approval. During the housing boom of 2007 and 2008, investors as well as many of the lending officers were seeking to make sales at whatever cost. Even if it meant violating lending practices and issuing loans to individuals who normally would not qualify. Because of the damage that was done, regulations have been put in place to prevent future occurrences.
According to Buyers Agent of East Florida, "Economists argue that what’s missing in the Daytona Beach housing bubble equation is widespread participation on the part of the buying public. Gone are the days of flipping condos in popular locations. Gone, too, are the mortgage loans made on homes that exceed their value. The biggest change is that borrowers with poor credit aren’t able to borrow money as easily as they were during the housing boom and resulting crash. A case in point is the simple fact that it’s difficult, at best, for a homeowner who is still underwater on his mortgage to refinance."
What does this mean for home buyers? The market will continue to fluctuate as the supply and demand changes over time. The good news it is unlikely that the bubble will burst, more so because there really is no bubble.
If you are looking to buy or sell in the Daytona Beach area, please reach out to one of our realtors at Oceans Luxury Realty as they are happy to assist you!