What’s Really Happening In This Real Estate Market?
The prices are not reducing. What the heck is going on? To be fair, they may still, but all the stats show that the homes are still going up in price. You are being “tricked” into thinking prices are going down by the fact that people are still listing homes high, trying to get a premium. Then they are lowering the prices when it doesn’t sell. This is not a falling market. This is a reality check to sellers. If you look at the actual trends, you will see that home prices went up again this month.
How is this possible?
Here are some reasons why the real estate market is not collapsing (at this time).
Existing sales data shows that the prices are still going up. This is mostly due to a lack of inventory. There are lots of signs of housing slowing down. For example, housing starts are way down. This is based on the new construction permits being pulled. But this means there is a shortage of homes and it’s not getting better.
Another reason there is low inventory is because owners don’t want to sell right now. They have a low interest rate in the three’s or better. Selling and buying will cost them a lot more in monthly payments.
This is where it gets a little weird. The buyers are not buying because payments have doubled in the last 6 months. So, the few homes on the market are not getting snatched up at low inventory prices. This opens the doors for a buyer to come in and get a deal. We just may need to redefine “a deal”. Here is what I call a deal:
- Have seller cover closing costs. We are seeing $10,000 dollar credits being offered in the listing.
You don’t even have to ask. It is being offered upfront to incentivize you.
- Not competing against multiple offers. This helps the price not get inflated more and increases
your chance of getting your offer accepted.
- If the home is on the market a couple weeks, you can likely get a discount on the price and get
closing costs paid by the seller.
The last thing to talk about it is this. Buy a home when you can afford it. Today is actually a good time to buy a home. You just need to be comfortable with the payment and your job security. Then, as you can see from this article, housing is actually a good deal right now.
Here’s my prediction. Housing prices will continue to go up. There may be a small adjustment or correction, but it will go up. Buy a home when you can afford it and when the incentives make it worth it to you. No one ever looks back 10+ years and says, “I paid too much for that house”.
I don’t believe the market is going to see a crash based on the data out there that. There just aren’t many homes on the market. Until the market gets flooded with more listings, the likelihood of getting a house at a significantly lower price just doesn’t seem feasible.