Suddenly, the real estate market is back. If you have been thinking about buying or selling, but your house has been upside down, now may be the time to dust off those plans and think seriously about it. Supply of houses is down. Demand for houses is up. Prices are going up with it. And interest rates for a new mortgage just keep on getting lower. It’s almost a perfect storm (in a good way).
My money is where my mouth is. I am getting ready to list my house for sale because the market has suddenly bumped up and I can actually sell it. I couldn’t do that just last year. We have another attorney in our office who just sold his house for full asking price after only 7 days on the market. This spike is real.
However, in our legal opinion, this may be a very temporary spike. If you are even thinking about moving this year, you may want to put that on the top of your priority list right now. There are a lot of forces working on the local economy that threaten to dampen the real estate market (and everything else) within the coming year.
The first force working against this market is the builders. They are going to hurry up and finish the unfinished houses they have now, and start cranking out new ones, to take advantage of this market. The builders have been waiting for this spike for about 8 years. You better believe they are hopping right now and trying to get as many of their homes on the market as they can. That will increase supply, and drive down prices. Your “used” home will be competing with new construction right around the corner.
The second big force working against us is the sequester. The government sequester is causing furloughs and layoffs, most of which have not actually happened yet. When those furloughs and layoffs really do happen, then the pain will hit the local economy. That will be coming later this summer. We expect to see an increase in bankruptcies and foreclosures later this year because of that.
Those bankruptcies and foreclosures are the third and fourth force working against us. They threaten to take away the main thing driving this spike in the real estate market – supply and demand. Right now, demand is high but supply is low. That means the seller is in a good place and can command top dollar. But if foreclosures escalate, there will be new homes on the market. That will increase supply, driving prices right back down again.
We may not have to wait very long to see this effect. Almost every week the bankruptcy attorneys in our office meet with someone who walked away from their house 3 or 4 years ago, and the house still hasn’t been foreclosed! The banks are sitting on these houses! They could start the foreclosure process any day and put their foreclosed properties on the market as soon as possible. That further increases supply.
If the builders start building, and the mortgage companies start foreclosing, the supply of houses in the market goes up. The best hope is that prices stay flat. But they could very well fall. If you snooze, you may lose out on this golden opportunity.
I was originally planning to rent my house. That is still a viable option, but selling is possible right now and may be the better option for you.
I knew the bankruptcy attorneys in our office were talking about the fact that rents were getting so high in the area that people who were losing their houses were finding it hard to find a place to rent that cost less than the mortgage they couldn’t afford. Would my new tenant be able to afford the rent? Renting in this market is risky and I would be one bad tenant away from becoming one of their clients.
So if you’ve been sitting on a house you want to get rid of, even if you were just told last year your house couldn’t sell, it may time to talk to a realtor to see what your house is worth – like now! Don’t wait, or you may miss the opportunity.