OPINION: Real Estate At The Lake Is Slowing, But It's Not Cause To Panic

With the Lake real estate market as well as the national market seeing a slowdown in the number of homes sold, and price appreciation slowing, you may have concerns about what happens next. Having lived (with a career in real estate) through the real estate and overall economy crash starting in late 2007, I understand why you might be nervous about where the market is heading.

However, I believe today’s market is not getting ready to tank and is much different than the housing bubble that burst 12 years ago.

Since 2007, short sales and foreclosures have accounted for a third of all homes purchased. The Mortgage Banker’s Association reported in late February that the percentage of loans in the foreclosure process at the end of 2018 was just .95 percent. This is the lowest foreclosure rate since 1996.

When the bubble burst in 2007, home values started to decrease. Over a four-to-six-year time frame, homes lost 25-30 percent of their value. Although homes are not appreciating at the rates they were until a year ago, they are not depreciating. Appreciation is still continuing, just at a slower pace. I expect home prices to continue to rise in 2019.

The number of homes sales dropped dramatically beginning in 2008. Comparing 2018 to 2019, we again have experienced a drop in lakefront home and condominium sales here at the Lake. This is not due to a lack of interest or ability on the part of buyers, but rather a lack of inventory available to purchase.

Lack of inventory is attributable to a couple of things. First, not enough homeowners are putting their property on the market. Some homeowners are unable to sell due to the amount owed on the mortgage. Others have been unwilling to sell until home values returned to at least the amount they originally paid. Low inventory itself is another cause; owners are holding off putting their home on the market until they find another home to purchase. Some owners are concerned about moving up into a larger home after previously going through the market crash.

The second major cause is a lack of new construction. Again, this cause has several sub-causes. I don’t have specific market numbers, but based on my experience of the market, we've been through a stretch of years where fewer spec homes and new condos being built than I’d seen since the early 1980s. However, I am seeing an increase in both since mid-2018. Builders have also been wary of starting a new venture, after experiencing the 2007 downturn and many getting caught short. The construction industry also has a major labor shortage across the country, and building material prices have escalated, making it difficult to compete with even a limited existing home market.

In response to the last housing bubble, lending requirements became much more stringent. While there are still many great mortgage programs available, they are based on much tighter guidelines which will help prevent buyers from overextending themselves. This shows up in the low foreclosure rate mentioned above. The economy and job market are also very healthy, unlike 10 years ago, which increases loan repayment rates. Foreclosures really take a toll on the overall real estate market, and that’s not happening or likely to happen any time soon.

There are the main factors I point to in saying that today’s slight easing in the market is nothing like what we saw occurring in 2007.

Michael Elliott has been selling real estate at the Lake of the Ozarks since 1981. He is one of the most respected brokers in the area. If you would like to work with Michael in the sale or purchase of property, or have interest in a career in real estate, contact him at 573.365.SOLD or cme@yourlake.com or stop by C. Michael Elliott & Associates, 3738 Osage Beach Parkway. View thousands of lake area listings at www.YourLake.com. You can also view each month's article, ask questions and offer your opinion on Michael’s real estate blog, www.AsTheLakeChurns.com