Yesterday the temperature fell and today the first snow came, even if little. Perfect timing I´d say, on the first day of December.
For our real estate agency December means business slows down and we can enjoy the holidays!
It normally stays calm until mid January more or less.....After mid January we market plenty of properties due to the increased number of separations and divorces which are directly correlated to the holidays, and statistically significant. Kidding,....I have no idea if it is statistically significant, nor if it is true... someone should find out!
To summarize these past 4 months have been busy. I will most definately say that we are on our way to have a bubble in our, kind of isolated, middle size town. Demand and thereby prices on one- or two-dwelling houses in the upper level of the price range here have subsided I´d say, whereby demand and prices on one- or two-dwelling houses in the middle and specially lower price range have increased substantially. This is not an unexpected outcome since prices on condominiums are rushing and reaching price levels of these lower to middle price range houses, and in effekt making a purchase of such a house seem cheap.
What is worrying is that it has become harder to sell newly constructed houses while, at the same time, bidding-wars drive the finale price of used houses in need of renovations i.e. houses built in the 60s-70s to levels almost equal to that of a newly built house in the same neighborhood. Do people know what they are buying? Are they under estimating the cost for renovating i.e. the total price of their house?
When it comes to apartments in a housing cooperative I´m sure most buyers don´t know what they buy. They have difficulties understanding the influence the financial state of the cooperative has on the value of the apartment and the annual fee connected to the appartment. Past 10 years prices of Swedish apartments in housing cooperatives have risen over 150%. This has been explained mainly by the economic performance, low interest rate and most importantly excess demand due to the housing shortage. I would also like to add changed preferences. More people prefer apartments to houses even when they have children.
Still, the past 3 months the average price of a Swedish appartment in a housing cooperative has increased by 7 % according to statistics! In our isolated town the double, although prices were already high in relation to similar areas. And I can´t see any reasonable justification for this sudden price increase in 3 months. The economic environment is worse, unemployment is increasing and is expected to continue doing so next year, wages have not gone up, if anything the contrary and we are the same amount of inhabitants....and on top of it all the interest rate is low and can on long term more or less only go up, Swedes do not amortize mortgages, do not have a savings buffer....Am I missing something here or am I right if I say I smell a housing bubble?
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