Am I “Overpaying”?
Hot Market
The most common asked question by our buyers is “Am I overpaying?” Buyers are reasonably concerned with overpaying as the market is dictating paying over ask and over market prices. I can not remember the last deal that we have been in that the Seller did not receive multiple offers and call for highest and best. The roller coaster that ensues afterwards is the same ride that almost every agent and buyer has been experiencing throughout the past few months. Not just high prices but, cash offers, contingency waivers, as-is, inspection waivers, appraisal waivers or gaps, rent backs, FREE rent backs, the list goes on.
Bubble Burst
So, “Am I overpaying” you ask. There are so many factors that go into arriving at the answer for this question, and many “experts” have come to form many opinions on this. While things seem to be cooling down a little bit, it should not be compared to the housing crisis that preceded the great recession. The circumstances are exponentially different. The people who bought homes can actually afford the mortgages they received. The same cannot be said for a large number of mortgages given out prior to 2007.
Supply & Demand
We believe it comes down to the basics of economics and “Supply & Demand”. There are just not enough homes on the market to keep up with the amount of people who are hoping to buy a home. Unfortunately, this is not something that can or will even out and be fixed in just a few years. While rising interest rates may help balance the number of buyers vs. sellers in the market, it cannot be assumed that this will correlate to home prices decreasing. Although interest rates have significantly affected buyers average monthly payment to the tune of $750 on a median home, according to Redfin data, mortgage rates are historically low.
Should I buy now?
Building costs have also stymied construction projects. So, if the fix to the supply of housing is increasing the inventory of homes, the price tag is also going up. Sellers, who were on the fence have also raced to the market to cash in in this market. Although the same can be said of sellers who raced in when the market was “at it’s peak” last year, and the year before. One thing we know is buyer demand is here to stay. Compared to the alternative of renting at equally high prices, we can confidently advise our buyers that buying now is still the right move.
