Experts predict 'obscene' homebuying market to fizzle as many become priced out
CARROLLWOOD, Fla. - Home values throughout the Tampa Bay area are increasing by the day. Real estate agent Vincent Arcuri says around 90% of homes are selling over the asking price.
"It's at a frenzy like I’ve never seen before in 30 years!" Arcuri told FOX 13 News.
He said the market is being driven up by out-of-state buyers who make cash offers. The high demand continues to push up home values throughout the area.
Arcuri said it's an "obscene increase in property values" in a relatively short time period. For example, he recently sold a four-bedroom Carrollwood home for $492,000. However, the buyers decided they liked Sarasota better and never moved in.
Four months later, he relisted the house and sold it for $600,000.
"This person made a $100,000 profit in a very short period of time," Arcuri explained.
Stories like this lead many people to wonder if the market is going to burst soon.
"We are definitely in a housing bubble and it’s a bubble that is starting to rival the bubble that we had in the early and mid-2000s," says Christopher Jones, an economist and instructor at the University of South Florida Department of Economics.
But he says there is comfort for those concerned about a crash. Jones said developers are much more cautious than they were in the 2000s when it comes to project size.
Also, almost all home buyers today are forced to put 20% down, unlike the reckless lending practices that led to the 2008 financial crisis.
"You almost didn’t need to have a dollar to your name. You barely needed verification of income and you could get a mortgage for a home. That’s not really the way it is," Jones said.
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Jones says consumers can expect more of a fizzle than a burst. Buyers will start to say, "I can't do this. This home is overvalued," Jones speculated.
In the meantime, he cautions those looking to pay a big price on a new home.
"We are really close to the peak. It’s only a matter of time before you see that rubber band of the market snap back and home prices start to plummet," Jones said.
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Arcuri agrees and says we may soon see the market hit the reset button.
"People’s incomes are just not keeping up with the price of real estate increases. In five years, if it continued at this pace, who’s going to be around? Who can afford to buy the homes?" he wondered.