Waukesha County Home

JUNE 2022 HOME 5 Competition in today's housing market has put many buyers in a bidding war for the home of their dreams. "You can barely get a sign in the ground, and everyone is jumping on it," says Kim Curtis, chairperson of the Greater Milwaukee Associa- tion of REALTORS. "But make no mistake, this is not a housing bubble." For some, the hotter-than- hot real estate market is stok- ing thoughts of the housing bubble that burst in 2008. Curtis, who is also a broker with Shorewest Realtors, says fear not. "The state of today's housing market is driven by the economics of supply and demand. There simply aren't enough homes for all of our buyers, and that is not chang- ing anytime soon." The dynamics behind the nation's 2008 housing situation underscore the confi- dence that Curtis and many other Realtors have in today's real estate market. Courtney Stefaniak from Stefaniak Group LLC points out distinct differ- ences. "First, the 2008 crash was fueled by subprime lend- ing, interest-only loans and the like. Today's lending requirements are much stricter, which puts the real estate market on firm ground." She contin- ues, "Next, there is pent-up demand for homes today. The market was at a standstill before." What happened last time is not happening now To explain the housing crash, easy money from lenders led to a home buying frenzy in the early 2000's. When the same people with- out home equity couldn't pay their mort- gages, foreclosure was inevitable. This resulted in a glut of homes for sale in 2007 and 2008. There was no surplus of buyers to absorb the homes and lenders were left holding the bag for loans gone under. Today's home buyers are well vetted for solvency, most sellers have a good deal of equity built up in their homes and people are looking for a place to "nest" — thanks to the pandemic. Stefaniak explains this con- tributes to stability. "Some people are stay- ing put and fixing up or adding onto their homes. Others are looking for a bigger foot- print. These are the buyers who need room for a home office, a place for the kids to play or an extra bedroom for a growing family." Other factors fueling housing demand Since inflation has hit the rental market, many first-time home buyers are finding a mortgage may be lower than what they would pay for apartment rent. Supply chain issues have added a layer of uncertainty and have somewhat curtailed new construc- tion — newly built homes would certainly help ease demand. Finally, rising interest rates seem to be having little effect on activity in the local real estate market. Curtis sees buyers continuing to move for- ward. "A higher interest rate will make affordability an issue but, instead of walk- ing away, home buyers are changing their expectations. They are looking at something a little smaller or in a different neighbor- hood." Still, there are hold-outs waiting for the market to deflate before reentering the buy- ing field. Curtis is seeing this happen and offers a straightforward observation. "Is the economy challenging? Yes. Is there infla- tion? Yes. Does that mean you should wait to buy a home hoping to catch a downward trend? No. We are not experiencing a hous- ing bubble. We are experiencing a supply and demand issue. And, if there is no bub- ble, then there is nothing to burst or crash." We are not in a real bubble Repeat of 2008 highly unlikely Curtis Stefaniak There are several reasons that the real estate conditions do not indicate the market is in a bubble. Among them, there are not enough homes to meet demand, area professionals say. Comparing 2022 to 2008 is completely dif- ferent, they say.

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