Well, which is it? Buyer’s market or seller’s market? Who’s got the advantage in the summer of 2012?
TWO GREAT REASONS WHY THIS IS A BUYER’S MARKET
Low Interest Rates. Mortgage interest rates are not just low, they are incredible. I just concluded a transaction representing the buyer who negotiated an interest rate of 3.75%. Are you kidding me? This means that buyers can afford much more house for much less monthly payment. I’m not talking about some cockamamie variable loan with a killer balloon payment in 5 years. This is a plain vanilla 30 year fixed rate fully amortized loan. I remember my first loan: 13.5% and I was happy to get it.
Low Prices. Home prices were (a) hammered down unmercifully during the housing crisis, or (be) swung back into a rational state of balance during the housing crisis. Take your pick, but there is no doubt that prices are still much, much lower than they were five years ago. What is keeping the prices low? Comparable prices of sold properties (sold comps) and the formal appraisals by lenders that are based on sold comps. The absolute most important element in setting home value (and price) are those pesky sold comps.
TWO GREAT REASONS WHY THIS IS A SELLER’S MARKET
Low Inventory. There are just not enough houses for sale to meet the demand, especially in the lower end of the price spectrum. Low supply, high demand should favor the seller, and it does, especially in time-on-market. Properly priced real estate is flying off the shelf.
Lots of Buyers. During the recession many people pulled their money out of real estate, out of the stock market, out of investments of all sorts. This money has been sitting on the sidelines, under the mattress, buried in the back yard. Now these people, many with lots of cash, have decided that this is the time to buy real estate for the two great reasons described above: low interest rates and low prices. Many of these buyers are investors scrambling to pick up cheap rental properties. Many are people who have wanted to relocate or re-size their home but have been afraid to do so. They are out in force. Lots and lots of them. They are discovering that they can no longer cherry pick, low ball offers, and dictate terms. They are re-learning all about multiple offers, bidding wars, and properties selling in less than a day.
So, which would you rather be right now? A buyer or a seller?
If you enjoyed reading this article, and want to find out more,
just CALL CJ at (530-906-4715) or subscribe below.
Get the latest posts delivered direct to your email