Bubble going to burst in Utah?

Question

A friend of mine is looking for a home to purchase and was talking (on a Facebook thread) about how expensive everything is lately. One of her friends mentioned that we're in a bubble right now and it's about to burst?

I'm considering selling my rental in Utah in September, but now I'm thinking I should wait for a while longer.....Thoughts?

I'm considering selling my rental in Utah in September, but now I'm thinking I should wait for a while longer.....Thoughts?

David Avetisyan · Answer

Indeed we are in a bubble.  The million dollar is question is: When will the bubble burst?

Soon? I think not! The market is, thus far, thriving.

My prediction, given trends and market analysis: Sometime between 2019-2020.

I hope it's sooner, but I'm not holding my breath.

Now is a good time to sell!

Scott Rabin · Answer

Absolutely in a bubble caused by Fed easy money in housing, stocks, and higher education.  All bubbles will pop, the only question is when.  The markets that crashed the most last time and took off the most will  absolutely repeat the scenario.  It might still be a considerable time before said bubbles burst so if you're happy with the profit in your rental it might be time to sell.  Everyone seems to think we have a year or two before a major correction.  The majority seems to have accepted this time frame.  Usually the masses are wrong.  Continue to shop for value.

Skyler Smith · Answer

My short answer is no, we're not in a bubble about to pop.

It's hard to talk about the Utah market as a whole, where Utah is made up of several smaller markets. There are many factors that make the Utah market very attractive, and there are several potential issues that could cause property values to drop as well. Utah has lower than average unemployment, and has many pro business policies that are attracting hip startups, as well as large established companies like Adobe and eBay.

I worry about the high level of college debt in the nation, that it could cause some catalyst for change in the way the nation handles college. I'm not necessarily worried about that enough to sell off my property. I worry about quantitative easing, about artificially low interest rates, and about some potentially dangerous practices that let banks insure deposits and practice sometimes unsustainable lending. There are always issues that could affect local and national markets, I just don't see anything in several of the major Utah markets that calls for too much caution. These issues will not likely destroy the economy, but let off some steam from the pressure caused by unnatural policies.

I say don't over leverage yourself. Buy valuable assets and add to their value as much as you can. Protect your assets and watch the market, but I think that now's not a good time to sell everything. Anything that will disrupt good real estate investments will hit the rest of the economy as well, and your chances of coming out ahead are higher than being left behind in a potential crash. Good luck, and let us know what you end up doing with your Utah property!