buying real estate, selling real estate, renting a home, housing inventory, investing, real estate growth, low interest rates

List NOW! Buy NOW!

List NOW! Buy NOW!

Many may not know that right now we have the lowest inventory of real estate listing most professionals in the business have ever seen! Even at the December sales rate, which is usually relatively low, we have less than two month of inventory!  To place that into perspective, a normal balanced market is considered to have 5-6 months of inventory at whatever the most recent months sales rate. If this seems complicated, call me and I will explain it to you, because this information is not the main reason for my writing of this post.

What everyone needs to understand is the our real estate market needs listing and it needs them right now.  If you or anyone you know is thinking of selling their house, they should put it on the market as soon as possible.  Normal wisdom is to wait until summer buying season to get listed but right now is likely as good or possibly better than the summer season will be for sellers.  Since the inventory is so low, homes that are priced right sell very easily and quickly occasionally for over list price (just like they do in the summer)!

Sure you say, “but if I wait until summer time the prices will be up and I will get even more for my house!”  That is likely, and you will pay more for the house that you want to buy after you sell yours, so where is the advantage there? This is one point I debate with people from time to time.  If you are staying in the same general market, it does not matter all that much if prices are up or down. You will get about the same ratio of return no mater what.  When prices are up you make more you pay more, when prices are down, you make less you pay less, simple.

The last reason to list now is a bit different. I believe that we need as many listing as possible to create a more balanced market.  If inventory stays low and demand continues to out pace it we run the risk of creating a bubble. Many of you may have heard how crazy the Denver market has been over the past couple of years.  We are not Denver and we will likely not see that scale of growth here. And that is good. We don’t want that level of growth. Slow and steady wins the race.  We need more listing to slow down the price growth.  Over the long term this will help us sustain growth in our community and lessen the chance of economic problems in the future.

So why then do I say buy now, if it is a seller’s market?  My main rational is that many projections expect 4-5 years of steady, or better than steady growth in real estate.  So basically the sooner you get in the better! You may as well take advantage of the great gains.  You also should take advantage of the still very low interest rates! The Federal Reserve has made a liar out of me for six years straight, (they say they will raise rates and then they don’t) so I am no longer predicting that rates are going to go up, even though they really are going to have to go up some day (the Federal Reserve did raise rates 1/4% but it had little affect on mortgages so far). And when they do…  I know that sounds like the beginning of and old man about to give you advice, but seriously, when rates finally clime LOTS AND LOTS of people will be kicking themselves for not getting in at the bottom.  Just the way that some of you reading this wish you would have purchased a house when prices where at or near the bottom, so it will be with interest rates.

I could write an entire small blog  post on how interest rate affects buying power, and maybe I will but not today.

If you buy a house in the near future for $200,000, and it appreciates at an average of 6% per year for the next 4 years, a pretty easy task if things keep moving on their current trajectory, that home will have an estimated value of about $254,000.  $54,000 of new wealth in only four years for living life indoors. Let’s now assume that this 6% appreciation is not sustainable nor is the growth cycle and home values fall. The bubble bursts, oh dear lord the horror!  Historically, when the bubble bursts prices drop about 10% or less.  Obviously the Great Recession that we just lived through was greater than 10% price drop but actually it is an anomaly. The growth was so huge that the bubble was much larger than “normal”. So if you take a 10% hit on the value of your home you have a value of approximately $225,000. That is not nearly as good but you are not upside down and could certainly get out from under it if you needed to sell.

This does not take into account all the other advantages that one gets from home ownership. Which, by the way, is what my next blog post will cover.

Don’t wait! Get in the market! Get a piece of these LOW interest rates! Help increase inventory! 

OK, love you, bye bye! Or buy buy if you can!

*** Please note, this is just meant to be informative, all facts and figures are assumed to be true and accurate but there can be differences in all values stated depending on the source material used.

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