4 Things to Know About the Current Shift. Protect Your ASSests

We know that real estate is cyclical. The up and down of real estate is somewhat predictable. The crash of 2007-2008 was on track with the trend but far more devastating than could have been anticipated. While many people lost their homes, retirement and loads of cash, we all gained some crucial knowledge. Some of them being, don't get into extreme amounts of debt (even when times are good), when the market crashed, there is opportunity (flipping, auctions and foreclosures were excellent opportunities for the investor with cash.) and third, listen to your gut. 

The crash created low inventory because apprehensive home owners were and are hanging onto their houses longer before deciding to sell. This has created a shortage of inventory around the country. Locally in Boise, Idaho, we have had historically low inventory for the past three years. So how can we have historically low inventory and have a market shift? Here are 4 things to know.

  1. MORTGAGE RATES The Feds have said they will raise rates for the fourth time this year! This means that buyers qualify for less home. The amount a buyer can borrow is lower because a higher interest rate raises the monthly payment. Qualifying debt to income levels don't change when rates change. The adjustment is made in what the buyer can afford and at a higher interest rate means a lower priced home. This means that the buyer will have to come to the closing table with more cash down to compensate or home prices have to adjust to attract the buyer.
  2. HOME PRICES DROPPING In the past month, locally, we are seeing a lot of price drops. This happens seasonally but these price drops are drastic after a slow August and September. Buyers just aren't looking or making offers on properties at the same pace as the winter, spring and summer of 2018. This slow down along with interest rate increases means the market corrects with dropping prices to get homes sold. This correction is good for the market and may be just what we need to increase inventory. As local residence feel more comfortable putting their homes on the market. The main reason I hear potential sellers say they DON'T want to sell right now is they can't afford to buy what they want. Now they can.
  3. SELL NOW The neon sign is blinking! The market is dropping, the time to sell is now. Yes, in the fall and winter. Historically homes sell at the same rate if not higher than spring. The reason? Lower inventory in the fall and winter means less competition as a seller and more buyers. No one likes to move, let alone move in the colder months. But this is an opportunity as a seller. Selling in the fall and winter will get you the most money in a price dropping market. This means, if your willing to rent for a few months, you can buy low in the spring! Sell high, rent a place, buy low. These are ideal conditions. Yes, I know you would have to move twice. My question for you is it worth the extra cash in equity to do so? The smart seller would say yes!
  4. BUY NOW Rates are going up! Still a really great rate, hovering around 5% means its still a great time to buy before they go up more. With low inventory you have to find an experienced agent (ME) to help you negotiate up front on your offer. With most homes having multiple offers, an agent (ME) that knows how to write an aggressive offer can help you get the home you want. The other really great option is building. Even builders are dropping or steady prices as the market is slowing. I strongly recommend having an agent outside of the builders agents. Remember the builders agents, represent the builder. As a buyer of a new construction home, Realtor services are free to you. Be represented by your agent (ME).

The right time to buy and sell is when your want to. If your gut is telling you, now is the time. Don't hesitate. Hesitation creates regret and lessens your options. You may have questions after thinking about buying and selling. I am here to help you. I have the answers. There is a great opportunity available in the market. Let me guide you, with honesty, in your unique situation to create a plan that makes you the most money and buy the new home you love!

Post a Comment