With interest rates that are incredibly low (less than 4%) you will probably see a lot of people buying homes! It makes sense to purchase the home of your dreams since they have never had more options than they do right now.
The new remote world will force many people to look for larger homes than the one they are currently renting or living in due to their company allowing remote work options. Large cities have a big need for homes that meet these needs, so there will be a great deal of competition for them.
In addition, it will be very likely that you will be able to find a home in a suburb or smaller city that offers many of the same amenities you would find living in a large city. However, you may need to invest a little time and effort into finding the right home, because many buyers will be looking for homes in your area as well!
Currently there are many buyers but little to no new homes listed for sale. Many homeowners are reluctant to put their home on the market for a number of reasons: 1) they do not want strangers in their home; 2) they feel that they are comfortable in their current home; and 3) they do not feel any pressure to relocate due to declining interest rates having little benefit to them. Additionally, with foreclosure protection keeping many distressed properties from coming to the market right now, there is a “perfect storm” type of environment. Too many buyers competing for far fewer homes.
In many cases, homes are listed mid-week with fully booked showings over the weekend and go under contract within days. Multiple offers (sometimes dozens) are common on many properties and the sellers often select buyers based on ability to:
- Pay significantly over the asking price;
- Waive inspec2ons;
- Waive appraisal protec2ons; and
- Provide a significant cash down payment.
It’s not always about who is the highest bidder; it’s more about who appears to be the least likely to walk away from the transaction.
No Home Inspection = Accept Responsibility for Home’s Condition
Agreeing not to inspect a house before buying it means the buyer will now own anything wrong with that property after it is purchased, which could potentially put major problems back on the buyer. For example: Hidden structural damage (water damage); concealed plumbing issues; leaks; toxic mold; defective foundation.
Investors can afford to assume this type of risk. First-time home buyers? Huge financial gamble!
Appraisal Gaps = Cash Trap
In many situations, although you may win the bidding war on the purchase of a property, you could be denied financing by your lender based upon the appraisal of the property once it has closed. If the appraisal comes back at a value less than the agreed-upon purchase price, the buyer must pay for this in cash. This is why all cash buyers or buyers who have a significant amount of cash available when moving to your target market typically outbid buyers who require financing.
Will there be a Housing Bubble?
While there are signs of an overheated market, the current environment is not a perfect match for prior housing market crashes through history. Demand exists for homes at the current purchase prices; supply is limited; working remotely has created real permanent increases over time in many areas of the country. The prices have the potential to decrease in value over time (especially as interest rates continue to increase and more homes are added back onto the market), but it is unlikely to see a sharp decrease unless the overall economy suffers traumatic losses.
Reasons That Motivated Me To Buy
Buying a home can be appropriate when:
You’re not required to waive any inspections
If you’re not significantly overpaying
You will not feel an undue burden from any of the financial commitments associated with that purchase
If the process of winning a home requires too much risk or provides a significant financial drain on your savings; then waiting may be the smarter option.
This is not about accurately predicting the real estate market. This is to ensure that confident consumers remain grounded in their financial decisions while feeling emotional due to numerous other buyers also wanting the same home.
While homes may seem to come and go, your financial security will last for many years.
If you sell real estate now, you might want to follow these tips:
Have patience
Understand how much money you have available
Don’t fall in love with any property before you assume it will sell quickly
Make thoughtful and rational decisions.
Sometimes, you need to be smart and not the first one in the process; since in the current challenging market, wise people tend to be acting faster than impulsive people.
