When you hear the term “buyers market” you would expect to be able to walk into the $1.5 million dollar estate and tell the homeowner that this is a buyers market and I want the home for $950,000. The truth is that many home buyers aren’t really aware what this actually means and even people in the industry sometimes forget. Basically when the market has more homes for sale than buyers the scales tip towards a buyers market. Early 2000’s many markets were the opposite and people witnessed a sellers market where homes were sold for $10’s of thousands over asking price. If a home was on the market for more than few days people would think that something was wrong with the home.
Several factors cause a buyers market but what is typically means is that a buyer has more options and more inventory to choose from. I always tell my sellers to just hand tough in a “buyers market” especially if they own a good property in a established community. Just because everyone says it is a buyers market doesn’t mean you need to give you home away. You can consider keeping it on the market or even just holding it for a few more months and listing it again. Never give your property away because your agent tells you you’re in a bad situation with the current market conditions. Remember real estate agents just want to sell the property, make their commissions and move on. If you are interested in selling homes earn your real estate degree from one of your local schools.
What options do I have if I can’t sell my home? Well the first thing I would look at is who is listing your home; don’t start with your home. I’ve taken listing away from plenty of real estate agents over the years that had no business selling homes. They got a listing and just sat there until someone came and purchased. A good agent can sell your home regardless of the market. Now with that said you need to do what the agent tells you. If they think that fixing that wall or adding some flowers here and there would help then you should probably listen to them but only do things that you really think will help. If they tell you that you should buy new granite countertops then I would be a little hesitate. You do need to remember that your agent should be out for your best interest and I believe they are 95% of the time.
I’ll tell you a little secret if you are an agent that will help you and your client. Are you ready? Treat every sale as if it is a sellers market. I get so excited when I do open houses and people walk in and start talking about a buyers market. I comment “you’re correct, for most home that aren’t as nice and in lower end locations. If you want I can give you a list if your interested in “those” homes.” Again, a buyers market only means that they have more homes to choose from. The one that you are showing, in your opinion, is the best one on the market. I get excited selling a $350,000 condo as if I were selling a $3 million dollar estate. Bottom line is that as a seller you’re making money in a buyers or sellers market and you need to make the most out of every situation. Besides who exactly is the person that establishes a “buyers” or “sellers” market? I really would like that job.
What is a Real Estate Bubble?
For years now we have heard people speculating about the end of the real estate era. No longer will people be able to “flip” properties (the ability to buy a home at a low price, do minor repairs, and then “flip” or sell it for a quick profit). Being from the East Coast I’ve heard this type of talk year end and year out. If you talk to real estate agents they tell you that there is never a bad time to buy real estate. If you talk to analysts they start talking about futures, economy, gas prices, social security and everything besides housing. So who do I believe and when should I listen?
First let’s take a look at the current situation and then work our way back in time. Fact #1: Interest rates are still low. Yes I said it, they are extremely low. Look back in time and you’ll see 10-13%+ higher interest rates so think again when you see a 6.5% fixed 30 year low. Fact #2: People want security. Back in the 50’s and 60’s homes weren’t looked at as investments. People lived in the same house for 30+ years or even bought the home that was once owned by their parents. This is something you don’t see today. Fact #3: Look at the world. Just look around. Where would you rather put your money? Would you live to give all your money to ENRON or WorldCom? Those were real good deal in the late 90’s and see what happened. People trust homes, they trust something you can live in and fix up and enjoy.
OK Chad so what does this all mean to me? The first thing I tell people that ask me if this is a great time to buy I always comment by asking them a few questions:
1. Is this is a good time for YOU to buy? That is can you afford what the market is asking. Some people might be financially ready to own a home.
2. Are you buying in a place YOU want to live? Is the area or home you are looking at a place where you can live for an extended period of time?
3. Why are YOU buying this home? Tell me why you really want the home.
So I guess I throw the question back at you when you ask me, but these are questions YOU need to seriously look at before you buy. If someone told me back in the mid 90’s that New York condo prices would be over 1 million I would try to sell them beach front in Arizona. Today, when you tell a customer a lovely 2 bedroom 600sq. foot home is only $960,000 they are actually excited. So what has changed? Why is $960,000 a good buy? Here are several reasons:
1. The person CAN afford the property
2. The person LOVES the home and area
3. The person IS financially ready for the home and feels the home is a good investment.
I’m not here to tell you that homes in Arizona will reach what homes in California and New York have been at but I am telling you that homes are expensive because people are making more money these days and are willing to spend money that normally would have been saved in an account or placed on the stock market. I know of plenty of people that were burned in the late 1990’s with tech stocks and now they own several homes making 10-20% per year. And the best part is if the market ever goes down they have a house they can live in.
OK so what about this “Bubble”? Well since everyone else has a theory about it so will I. I think the “bubble” is already busted. WHAT! Yes, busted and here is why. We have seen markets increase 20-30% for that last 5 years and now almost every state is at record numbers. They are selling more homes than ever before, the prices that are being fetched are at record peaks and people can’t get enough. We have already busted. Of course the market is going to be flat for some time and then start to work its way up. Why shouldn’t it. Who said that everyone must invest in 401K or mutual funds? I think people are sick and tired of getting ripped off by Wall Street and want to buy things like real estate and land. Trust me I’d love to buy a New York condo for $250,000 again so if you really think I’ll be able to buy it once the “bubble” gets popped then should I just wait? NO and the reason is because you’ll never see $250,000 again. Now with that said are there better times to buy and are better areas than others? Yes and there will always be. The point I’m trying to make is that if you want to sit around and wait for the big bubble to burst you might be waiting until the end of time. If you think I’m not telling the truth the think about this fact. Two years ago in California people were really getting worried about the real estate market and wondering when the market would “correct”. Well 2 years later prices are up another 40%. Do you actually think the market will correct 40%? The answer is no, so the people who waited to see the market drop basically lost 40%. Now 2 years from now when California gains another 10-25% those same people will think “Wow we really should have bought that home for $300,000 less 3 years ago.” Those people will never own a home.
Do yourself a big favor and research the area where you want to live and do your homework. If you can get into a home with a good monthly mortgage payment, live in a good area and enjoy your home then you’re on your way to being a proud home owner. Don’t let the talks about this “bubble” make you lose out of owning.