While the last 3 months of any year tend to lag behind other quarters in real estate sales, prospective buyers should think twice before deciding to go into hibernation. The tax credit will boost sales somewhat, but unless first-time buyers are already under contract, they may have trouble closing in time to meet the 11/30 deadline for the tax credit (unless Congress extends or expands the program).
But for now let’s forget about that special program and focus on current market conditions in northwest Ohio and southeast Michigan for all buyers. Our listing inventory is down from the all-time high levels of a year ago, but nevertheless remains high by historic standards. In just a month, Thanksgiving and the holidays will be upon us, which tends to result in some buyers postponing their house-hunting. Relatively high inventory, relatively low number of buyers . . . that usually defines a buyers’ market. In brisk markets simultaneous offers are common, driving prices up. That is far less common in the 4th quarter, giving buyers who act now a competitive advantage compared to those who start looking in the spring.
So, if you are considering buying in the next year, I’d suggest you make that dream come true in the next 3 or 4 months while other buyers are on the sidelines but sellers are lined up to negotiate with you.
We hear that all the time. It’s a logical concern since very few can afford to be “the proud owners of two homes” for very long. Assuming that sequence (sell first, then buy) is necessary, let’s examine ways to not only make that work but also hasten the process.
As often as we hear homeowners make the statement above, we hear sellers add “but I’m not giving my house away!” Again this sounds logical, and is certainly human nature. After all, nobody wants to sell their home-sweet-home for less than they paid for it, but in many cases that is where the market is today, and the market is the market. Selling for less than you think your house is worth stings, but consider the following example which is really quite objective.
Let’s say you are selling a home in Toledo that you believe is worth $100,000, but the market appears to be saying it is only worth $90,000. Nobody wants to “lose” $10,000. But consider the second half of your move, the purchase. You are looking at a home in Temperance whose owners believe is worth $200,000. But if the same hypothetical market discount of 10% might be realized, that home would be purchased for $180,000 today. So you “lose” $10,000 but “save” $20,000 . . . What’s wrong with that picture. Of course this assumes that someone is moving up in price and these are purely hypothetical numbers. But the fact remains that sellers are likely to sell for less now than they would like but they will enjoy the other side of the transaction when they become buyers. Moral of the story: Sellers need to listen to their professional counsel and price their property to the market, and in the long run they will be just fine.
Not everyone seems to buy this logic. How about you?
There is no question there is a pent up demand for housing, first homes as well as move-ups. So why isn’t all that demand being converted into closed transactions? There are clear reasons for one group (those on the sidelines), but the fence-sitters are more perplexing.
Some who would love to realize “The American Dream” are forced to wait due to unemployment, credit issues or similar obstacles. This is a substantial group in Toledo and all of northwest Ohio and southeast Michigan. Unfortunately it will take them some time to work toward their home purchase.
The others, however, have been featured in TV ads by the National Association of Realtors, sitting on a fence out front of the house they yearn to own. What are they waiting for? In uncertain times it is easy NOT to make a major financial decision, however contrarians often have a way of seizing opportunities. In my mind, it takes no boldness at this time for qualified buyers to seize that opportunity. Consider these factors: Interest rates remain at extremely low levels by historic standards; it is probable that they will rise over time, possible that we’ll even see double digits again one day. Inventories are beginning to decline, but many quality properties remain on the market in all price ranges. We’re in the 4th quarter, which traditionally is the slowest in the real estate industry. That translates to fewer buyers to compete with, hence better negotiating power. Add to that favorable tax treatment (including the $8,000 tax credit for first-timers if you hurry) and likely appreciation over time, and voila! It’s time to buy, this quarter. So what are people doing out on that fence?
What am I missing in this analysis? We would love to hear from real live consumers.
