Ladies and gentlemen, when we’re giving, providing and sharing information with the sellers and purchasers, understand, we’re talking about buyers, we’re not just talking about first-time buyers.
There are people who settled on the house they purchased in 2006, because that’s the only home they could afford.
So maybe instead of being on the golf course, they’re a block off the golf course.
Instead of being on the water, they might be three blocks off the water. Well, those same people don’t want to settle anymore.
Their stock prices have increased drastically in many cases and they have some serious investment money there.
Their job outlook is much, much better.
Maybe even they’ve gotten a raise or increased the profitability and bottom line of their business.
They’re now looking to move into the home they’ve always dreamed of moving into, and we have to let them know that waiting is not going to help them.
Johnathan Smoke, Realtor.com’s chief economist has said: “Arguably, the biggest challenge to buyers this spring will be simply finding a home to buy and getting it successfully under contract. That’s because the supply of homes for sale is at an all-time low (18 year low to be exact), and yet demand is strong and getting stronger.”
Again, ladies and gentlemen, if you are contemplating selling or buying, I call it our most perfect storm in the history of real estate.
The reason I say this, is the following, as I have repeated saying this many times before, that interest rates are I believe, at a 60-year low (my parents bought a home in 1956 with an interest rate of 6.02 percent).
Now, the rates are hovering between the high 3s and low 4 percent (you can buy the rate down into the 3s if you pay one point lowering the rate approximately ¼ percent) or take a fixed rate, 7 year A.R.M . in the high 2s), inventory as I have mentioned earlier, is at an 18-year low and demand, from my calculations, of Millennials, first-time buyers and the massive Asian audience, purchasing primary residences (they were the number one purchasers in 2015-2016, beating out the Canadians for the first time!).
That perfect storm is here and for how long no one knows.
World events and their negative impact, higher interest rates which will occur, it is just a matter of time, as well as other unknowns, will somewhere along the line have an some adverse effect on our real estate market, so why not consider selling now?
However, people are comfortable in their homes, with mortgages paid off and the only worry is to stay active and productive in your later years.
Retrofitting your home to stay in place is another option.
But again, many have complained that their real estate taxes have superseded what they used to pay in their monthly mortgage payments.
Moreover, heating costs, upkeep of the property, the roof, plumbing, etc. and oh yeah those stairs, oh boy!
Cashing in now can be a huge plus, as long as you know what to do the windfall that many will experience. Ever think about a triple tax exempt bond?
Three percent tax free sounds good to me, how about you?
For those waiting to buy that move-up home makes no sense with both prices and interest rates going up.
Even Bloomberg News reported on it: “It’s the 2017 U.S. spring home selling season, and listings are scarcer than they’ve ever been. Bidding wars common in perennial hot markets like the San Francisco Bay Area, Denver, and Boston, are now also prevalent in the once slow and steady heartland, sending prices higher and sparking desperation amongst buyers across the country.”
Dr. Frank Nothaft, chief economist for CoreLogic: “With lean for-sale inventories and low rental vacancy rates, many markets have been housed-have seen housing prices outpace inflation. Over the 12 months through January of this year, the CoreLogic Home Price Index recorded a 6.9 percent rise in home prices nationally.” Remember, broken down by states, the CoreLogic single-family rental index is up by 2.7 percent, both rising faster than inflation.”
So now we talked about the move-up buy.
Let’s talk about the first time-buyer for a second. We have to also realize that that first-time buyer, they have a choice.
They’re going to either jump into the market now, or pay more later. But if they don’t jump into the market, they’ll be paying more in rents, and that will make it more difficult for them to go ahead and save up for the down payment.
Bill Banfield, vice president of Capital Markets at Quicken Loans has said, “Low levels of home inventory persists as the main driver of home value growth. There are still plenty of interested buyers vying for a slim amount of homes for sale, pushing prices higher. So, your decision as a seller, is to either consider selling now or not and as a buyer, to jump into the market and buy something; or sit on the sidelines and suffer the consequences of future increased rents and the inevitable decrease in your family’s personal wealth, by giving it all away to your landlord!
Banfield continues, and says, “Home values are likely to move higher as the spring buying season approaches, unless the number of homes available increases (and that isn’t going to occur).”
Even if interest rates increase, and some predict prices will flatten out or decrease; the fact is, that the demand is way too strong right now and into the foreseeable future, so lower prices are not going to happen!
Frank Martell, president and CEO of CoreLogic, says “ Home prices continue to climb across the nation, and the spring home-buying season is shaping up to be one of the strongest in recent memory. A potent mix of progressive economic recovery, demographics, tight housing stocks and continued low mortgage rates are expected to support this robust market outlook for the foreseeable future (as I have been saying all along)
We expect the CoreLogic Home Price Index to rise to 4.8 percent nationally over the next 12 months, buoyed by a lack of supply and continued high demand.”
Maybe, you sellers should consider selling and you buyers should think about finally becoming your own Landlord!
Phil Raices is the owner of Turn Key Real Estate at 7 Bond St. in Great Neck. He can be reached by email: Phil@TurnkeyRealEstate.Com or by cell (516) 647-4289 to answer any of your questions. To search for any type of properties or to see what your home is worth or homes that have sold in your area, go to WWW.Li-RealEstate.Com