Historically, a real estate agent would tell clients that purchasing a home has a lot to do with good timing. However, we’re currently in unconventional times. The mortgage rates have been at an all time low, and the demand for housing has soared. There’s also the pandemic to consider. So truthfully, the answer isn’t as black or white as it once was. You may be wondering, is now a good time to buy a house?
Real Estate Pricing Increase
In June, Fannie Mae conducted a national housing survey that stated only 35% of consumers think that now is a good time to buy. Since 2005, this is the fastest that home prices have risen, according to the Associated Press. Three of the top reasons the market is so hot have to do with supply and demand, construction and materials cost, and low mortgage rates. Again, this can all tie back to the pandemic.
While the world was shut down, more people realized they wanted larger living spaces rather than apartments. Employers started to allow employees to work fully remote. And families missed being near their loved ones. This drove the desire to move, but now the question is where to go and how to buy with such scarce inventory. Although desire was there, a lot of homeowners chose to hold on to their properties. Thus, a seller’s market was born, bidding wars began, and home prices skyrocketed.
According to Zillow, houses nationwide are only staying on the market for an average of six days. Of course this is great news for sellers, but not so much for buyers. Depending on the house and the location, some homes are sold almost as soon as they’re listed.
Another factor to consider with these times is America’s largest generation has reached their prime home buying years. Millennials have been wondering if now is a good time to buy a house. They are now in their late 20s, or early 30s, and are starting to settle down. With the low inventory, millennials, along with all other ages of those in the market to buy, are positioned to take a stance and compromise on purchasing a home. Dream homes aren’t as attainable since prices have increased, but locking in better financing is the trade-off some people are willing to accept.
Unfortunately, due to bidding wars, even inventory for purchasing fixer upper homes to potentially turn into dream homes is difficult. These fixer uppers are being sold at record highs as well, and a large number of buyers just don’t have the extra finances to spend on the labor and materials. Millennials are in their early stages of their careers and typically don’t have a large amount of wiggle room in their budgets. Other buyers who may have an extra safety net of money are now going up against investors for these homes. However, most of these investors are offering cash without contingencies and quick closings. In general, most consumers can’t compete with that regardless of their ages. These homes are then being flipped and sold at record high prices as well.
Is Now A Good Time To Buy A House: Emotions And Overconfidence
No matter which side you’re on, it’s difficult to not let emotions take over while making a huge life-decision. Some buyers tend to get emotional during the process, while some sellers may become overconfident.
Buyers and Emotions
Consumers looking to buy homes are either getting emotional and end up purchasing a home that they are paying way too much for, or feeling defeated and holding off on purchasing if possible. Buyers may be consistently asking themselves if now is a good time to buy a house. Although predictions have been made, no one can truly say when the market will balance itself back out. If you’re buying a home it’s best if you take a step back and truly look at all factors. Make sure you’re taking the important things into consideration. Cosmetic changes can always happen to a house, but a home’s location and school district cannot be changed unless you move. Even though it can be a frustrating and draining process, it’s better to wait for the right house to come along if you can.
Sellers and Overconfidence
On the other side, sellers need to realize that although the market is currently in their favor, they can’t be too overconfident. Yes, homes are selling quickly. But sellers need to make sure they have a place to go once their home is sold. If you have a second home, are moving in with family, or financially well off, you may be good to go. If you’re selling to maximize your home profit with the intention of renting until you find something else, you may be taking a risk. Rental property pricing has also increased. Owning a home vs. renting a home are two very different markets that don’t always move in tandem. In the long run, it’s nearly impossible to properly compare the cost of owning a house against the cost of renting.
Another consideration for sellers is to not try and be too greedy when listing your home. Many people are driving bidding wars and earning top dollar on their properties, but make sure you can properly do that so your house isn’t sitting on the market without traffic in such a favorable time as a seller. Working with an expert, like the agents at Trelora, can help. Although it may seem like you should automatically just list your home for a large amount, it may be better if you take a different approach depending on various factors. In the long run, it can be more profitable if you list your house at a more competitive price with more interest for buyers who are looking at a certain price point, and they can drive the bidding up to the number you originally wanted, or more.
Working With an Expert
Working with the right agent makes a huge difference. If now is a good time to buy for you and your family, Trelora is able to help you do so. We’ll even split our buyer’s commission with you up to $6,000 cash back. If you’re selling, Trelora is able to assist you so you can save thousands of your hard-earned equity. Call us today for a free, no obligation consultation.