Tough market, high appreciation, multiple offers.
And then, it happened.
The luxury market showed signs of weakening first. It always does, as the wealthy are not fans of buying high and selling low.
The trickle down had begun. Homes priced $500,000 and above were slow, but everything below that price point still flew off the proverbial housing market shelves.
months of inventory. Until something unprecedented happened.
We hit 0.
0 – let that sink. This generation of millenials and baby boomers has never seen a housing <shortage>.
Compounding the issue was rising rents. 10, 20, even 30% year over year rises in average rent costs absolutely pushed some families to the brink and an even greater number into the quandary of buying a home as a mortgage would be significantly <less than renting>.
In short, is this a shift in the housing market?
Yes. Undoubtedly yes.
Many real estate agents and home owners still have traumatic memories of the 2008 recession, so any stall or slow down in growth is often anticipated as a disaster.
The numbers don’t bear this out.
Showings decline, pendings decline, sold homes decline. But what caused this decline?
We can point to a number of factors: less inventory means less buyers. Some buyers locked into 6 months or 1 year leases so that they would have somewhere to live.
The most significant factor?
Competition between baby boomers and millennials.
Baby boomers are trying to downsize and move into smaller living spaces that require less maintenance. Millennials are trying to buy those same houses as they’re the traditional starter home size. Sprinkle in the fact that home builders are shying away from building any new inventory in this price point (typically below $300,000) as the profit margins are negligible with increasing land and building costs.
These compounding factors have created the perfect storm that has created intense competition for homes with little relief in sight.
Hence, the million dollar question (or $300k): What to do if you’re trying to buy a home? And how do you win with such intense competition?
First, rejoice! Sorely needed inventory is on the way. It will take several months for our markets to replenish inventory levels to a healthy 4-6 months that is necessary for a balanced market.
In the meantime, there are several ways you can best prepare yourself to win in multiple offer situations and secure the home you desire.
We’ll cover the hows in part 2!