It’s a simple question, are you really a buyer in this market? Meaning are you willing to pay well over asking price, not ask the seller to repair anything, let the seller stay in the house after closing, pay some of the sellers closing costs…and then some. It might take 5 or 6 offers on different houses before you get one, and you will be made to feel that the seller is doing YOU a favor by LETTING you purchase their house by paying them more than they ever expected.
As I tell the agents in my group, always create the proper expectations.
If your buyers are not willing to do those items, someone else will!
I say this to give you some hope, as well as perspective.
Traditional thinking is when a market is this hot, it’s a bubble and it will burst just like it did in 2005-2007. The perceived sky-high prices and the lack of choices make it such that people are afraid, and they stay put.
My day-to-day experiences, my 30 years of selling, my involvement with real estate committees is telling me things are different. Yes, politics are pathetic, Covid is an unknown, the structure of how jobs are being performed is changing, and so many home sellers are paralyzed into staying put. They want clarity of where the market is going, and don’t want to buy at the peak of the market like they did in the crash. I would love to say I have a crystal ball and can tell you with certainty (I’m asked this daily) things are going to keep going at this sizzling pace for a while. I don’t have a crystal ball but I do have some facts that I think will back up my thoughts that this market will continue for a few years.
Here are a few things that are different than when the market crashed.
• Interest rates are much less and the Federal Reserve will keep them there are for a while.
• People are putting more money down on a house in today’s market. In 2005 there were a lot of zero money down loans available.
• Buyers are utilizing fixed rate loans. A 3% loan is for 30 years! In 2005-2007, adjustable rate loans were all the rage. There is no better hedge against inflation if you are locked in. If and when inflation hits the housing market, a 3% interest rate will only be that much more advantageous.
• As much as you think you see the building boom happening, the builders cannot build enough units to keep up with the influx of the growing population. According to our Building Industry Association, Columbus will be SHORT about 14,000 units, both homes and apartments, every year until 2050.
• People are flush with cash. Many people did not spend much money last year so they have reserves, unlike in 2005 where everything was highly leveraged.
At the end of the day, if you feel like you are overpaying for a house, try to think long term. I think this market will be around for a few years, so if you wait, things will only keep getting more expensive. Hedge against inflation now, hold your nose and pay what you perceive as a high price but in a few years, you will be glad you bought.
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