Midyear
Real Estate Market Observations
By now, we all know that our real estate market is sizzling!
We have an inventory problem, with many more buyers than
sellers. I have a ton of sellers who say,
“I would sell in a minute if I had a place to go” or “I would pay more than
asking price if I could find something.”
There are so many factors that are driving the market, and a lot of misconceptions.
Here are the blanket statements you are likely hearing:
· Every
house garners multiple offers.
· Every buyer
is paying more than asking price.
· Buyers
are paying $50,000 or more than asking price.
· Buyers
are letting sellers stay in their houses for months after closing.
· Buyers
are not doing home inspections.
· Buyers
are writing offers on houses sight unseen (curbside offers).
· Sellers
are only accepting cash offers.
· Buyers
are paying some of the seller’s closing costs.
· Sellers
are requesting non-refundable deposits.
· Every
house is being sold “as is.”
· The
house didn’t sell in a day, so there must be something wrong with it.
While some of these statements are true, every transaction
is unique. Here are some of my
observations.
There is a little easing of the inventory issue…a
little. In our MLS, a traditional market
has 6000 or so homes for sale. Our low point was about 1500, and now it’s around
2000. This is still a challenge, but not
the worst. We are still getting multiple
offers on properties but instead of 10, we get 2 or 3 unless the property is
over improved or priced too low. Inflation is rising so people think interest
rates are higher. Higher than what? When
I say a little, I mean maybe .25% higher.
Interest rates of 3% are still out there!
Many think there are shortages only in certain price
ranges. This just isn’t true. While it’s
true that any home listed under $250k will likely get several offers, even
high-end listing will move quickly if updated or if they have a unique
location. I have buyers all over the
market, from $200k homes to $400k condos to $2 million dollar luxury
properties. Each segment has a unique
market, but each still has high demand.
The $700k market has been a challenge but this is where I’m seeing a lot
of overpriced listings with sellers thinking $500k properties are worth $700k
due to the market demand. If there is a
“soft” spot in the market, it’s in that $450k to $550k range where things might
take a little longer to sell.
New construction can be very frustrating in this market. In
the past, the building process began when a realtor introduced our buyer to the
builder (I represent buyers through the building process at no cost or
increased price to the buyer). Buyers would choose from many different lots and
house styles, lock in a price,
many times contingent upon selling their current home, put minimal money down
until closing, and in 6-8 months would move into a personalized, brand new, warrantied
home.
Now, many times the building process begins with buyers
entering into a lottery to see if they get the right to choose a lot. Buyers can no longer lock in a price until
the curbs are in (in the meantime the prices have increased), a 5% deposit is a
minimum, the contract can’t be contingent upon selling their home, and there
may be clauses that state that if raw materials increase, the cost can be
passed along to the buyers. Also, the
process might be 10 months or it may be a year, and the builder can’t guarantee
all of your appliances will be in at closing.
I frequently get asked,
“Now that people have to start paying their mortgages, will there be a
lot of foreclosures flooding the market?” The quick answer is no, it takes a long time
for a foreclosure to happen and most homeowners will manage to stay in their
home. Homeowners have much more equity
than during the housing bubble and interest rates are much lower. I also get asked if we are in a classic
housing bubble that is about to burst. No! The low inventory problem is here to stay and
demographics, our local stable economy, historically low interest rates and
housing affordability all say that we will continue these market trends for the
next few years.
Embrace the market, it is healthy in our area.
