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68 Showings. 32 Offers. $100,000 Over Asking. All Within 24 Hours! That pretty much sums up what we are seeing in many markets across the country right now. But why is it so crazy?

There are a few reasons that the market right now seems like something out of apocalyptic times, so let’s break down what’s happening…

#1. Inventory is Low.

Right now, inventory across the country is extremely low. But just how low are we talking? Well, according to the National Association of Realtors, a balanced market producing median home prices has about six months worth of inventory. Most markets right now are sitting below the two month market. Now that is low! With demand for homes at an all time high and little supply for the buyers, it is no wonder we are seeing lines of buyers sitting outside those just listed, move in ready homes.

With multiple buyers interested in the home comes multiple offers. Multiple offers drive the bidding wars. Bidding wars raise the purchase price of the home even higher.

#2 Interest Rates are Low.

So we know the situation with the supply, but what about the demand? One of the driving forces behind the demand right now is the low interest rates. With interest rates being at historical lows, buyers are able to afford more home than they would have been able to in the past. For example, if you purchased a home for $300,000 with 20% down and a 3% interest rate, your principal and interest payment would equal $1011.85/month. That monthly payment jumps to $1145.80 with a 4% interest rate. These interest rates are making homeownership more feasible for many renters or even those just looking to upgrade their current home.

#3 Desire for More Space.

Along with the low interest rates, a desire for more space is a huge reason demand is high. With many families now homeschooling and working from home becoming more of a norm, buyers are looking for homes with more space. This desire for more space has increased the amount of buyers are the market, again driving demand.

So What Next?

So what does that mean for the future of the housing marketing? Are we headed towards a bubble? Experts expect the housing market boom to continue for the foreseeable future but aren’t worried about a crash like that of 2008. Many say the protections that would put into place for the lending industry post the 2008 housing collapse with keep this from happening.

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