The housing market is heating up
- Sold in three days
- Here’s the six things fueling this activity…
- We would warn you…
The housing market is heating up in more ways than one. Early warm weather in some hot markets is causing a stampede at open houses. A lack of inventory is present in most hot markets. Competition for the available inventory is fierce.
One Boston suburb had a 100 people show up for an open house in the first 45 minutes blocking traffic on the street for blocks. The next day, 150 more people showed up. There were more than a dozen bids on the property, many over the asking price. It was sold in three days.
Here’s the six things fueling this activity:
- The media is reporting favorable consumer confidence reports.
- Favorable unemployment reports.
- The media is doing everything it can to let the public know that everything in the economy is looking up.
- Also, high rents that have gone up for five years in a row are also making people see homes as more affordable. There are millions of renters in the U.S. who say they will stop renting and buy a home within a year.
- The media trumpets home affordability and all types of new low down payment loans and other gimmicks are starting to show up once again.
- All this, along with inventory being half of what it was five years ago, is driving prices up every month, encouraging buyers to scramble for a home. People who are downsizing can’t find smaller homes and people looking for larger homes can’t find any either. The pickings are slim.
We would warn you to be very cautious as this frenzy in buying is just that. Prices will not be going up forever,. In fact, as more lenders open up the foreclosure floodgates, inventory won’t be a problem and people will discover that they paid too much and are getting trapped once again in the housing market.
QUESTION: What should readers take away from this message today?
ANSWER: That when everybody is in a panic or buying frenzy you should step back.
QUESTION: Why is this information timely?
ANSWER: This information is timely because we are approaching the spring and summer home buying seasons. If you watch the news people are also remodeling and buying new furniture at a rapid pace.
QUESTION: How can readers best apply this information to their lives right now?
ANSWER: If you are renting, continue to rent for at least another two years until this manufactured panic subsides and prices fall more in line.
COMMENTARY: If you are a seller this is your window of opportunity to do just that. However, if you are considering buying this is the wrong time. However, it might be okay to buy a property at a deep discount to fix and flip. If you intend to rent and can’t afford the rents then downsize or get very creative. There’s always a way around it.