Hello and welcome to another edition of Mark's Market Update!
What is happening in the market now that the sun is out and the snow is away?
Now back to Mark's Market Update.
Back to what is happening, it is the same story we have a significant weakness in inventory, and a huge amount of pent up demand by buyers.
The 2 biggest questions are:
Do I think this is a bubble?
- No, I do not think this is a bubble. The reason this is much different from 2008, which was our last big bubble, was equity from sellers was significantly less.
- There was stated income for borrowing, and borrowers had no business buying many of these homes. What we’re seeing today is the equity’s far greater, and this market has forced buyers to actually buy at their price point but to search for homes below their price point, so they can overpay for that home.
- I know it doesn’t sound right, but here’s an example. If a $400,000 buyer can only afford $400,000, right now it’s a very difficult time to be looking at $400,000 homes. We’re seeing many of our buyers looking at great $350,000, $360,000 competing against other buyers that are really just in the market to buy a $350,000 home. Our $400,000 buyer is able to pay $375,000, $380,000 and win that house, still be at budget, and still have equity. So, it’s a lot different than what we saw previously in the bubble.
Is the market gonna change that all of a sudden, we’re going to have an opening up of inventory?
- I don’t believe so. I think we’re going to see an increase in inventory, but pent-up demand is going to absorb all of that inventory.
- Plus, what we’re seeing over the next 2-3 months and beyond, is many great homes that the sellers would sell immediately, if they could find the right home to buy. So, there are a lot of buyers that are ready to go, they have great homes to sell, but they’re worried to sell their home first and not have a place to go.
- For those individuals that are worried about double moving, renting or temporary housing, it is no better time to get your home on the market to sell.
So again, we have to be patient, but if you want to buy in this market you have to have the appetite to participate in this market.
- We’re seeing people buy as is, removing appraisal writers, and other really interesting ways to win those houses and we’re more than happy to go through them in detail with you.
- Interest rates have also crept up a bit, which is really the first time in a few months that we’ve seen rates above 3%
So, for these houses, buyers are paying a premium and interest rates are still incredibly low so it’s still a great time to buy. There is no better time to sell.
Don’t hesitate to reach out if you have any questions about buying, selling, investing, or anything else--we’re here for you!