How many of you out here are thinking about buying or selling your home? Sellers are reaping hefty rewards on the bidding prices for available hosing inventory as some homes are selling for hundreds of thousands of dollars over the asking price. Conversely, buyers are either forced to participate or look in areas they may find less desirable and where prices are not being set as unrealistically by a seemingly uncontrollable market.
I have been searching for a home for a few months now and either I must accept being part of some crazy bidding war where potential home buyers are vying for a home and willing to pay thousands of dollars over the asking price or by the time I make an inquiry the home is already pending or contingent. Seriously, I have even been on Realtor.com searching for properties and witnessed a property being listed say 5 minutes ago go directly into pending as I sit glued to my screen. It is truly amazing!
I have also spent hours driving around in the areas that I would like to own home in only to see some of the homes that are currently listed in such shabby locales that I would not feel safe in, yet the prices are $299k and above! Perhaps at the price things are changing, but maybe not.
I do not know how many of you can recall the housing bubble in 2005-2008, but I don’t think that was as much a frenzy as things are now and look what happened in the end. Burst, big time! Are we headed for more of the same now? I’d say that is a very good question. I am just a small time investor and do not know all, or most, of the answers. There are some enlightening statistics that you may find of interest. I know I did.
Eight hundred twenty thousand (820,000) homes were sold across the USA in 2020 which was the largest number of sales since 2008! Mortgage rates are at near record lows, and this is stimulating the marketplace too. Housing prices are at record highs because there is such little inventory. In the greater Naples, Florida area some sellers have seen the sales prices for properties double from 2019 through 2020/21.
I have a friend who lives in Phoenix, Arizona. She and her husband decided to downsize a year ago and sold their home for over $500,000.00. They decided to purchase a new home. They have a pad, and nothing more has been done on the property they purchased. They are renting and had high hopes they would be in their new home now. There is not only a shortage of housing inventory, but a shortage of labor or willing workers in that sector that is driving up the prices too. Her old home was recently placed back on the market with the new owner for almost a million dollars. Looking back she wishes she had not sold her home.
Harvard University conducted a study along with Habitat for Humanity and found the following. Housing prices and rents are outpacing growth in income for the eighth year in a row. Most areas have noted a double digit increase in housing prices for the past couple of years. They predict that housing is going to be the top commodity going forward and problematic for many who can no longer afford to purchase or rent.
Norada Real Estate Investments said they tabulated the rise in housing prices across the USA at about 19.68% to 20.6% over the past year and came up with a median price per home of $380k. Rising prices, low interest, and little inventory is creating an even wider disparity between the have a home people and the have not’s. Which side are you on?
Will this housing craze continue unabated? I am unsure and it does have me wary. However, FreddieMac believes that sometime in 2022 we may see this frenzied market smooth out a bit. I guess time will tell but I am closely watching the metrics.