What a difference a few months make. Last summer, home prices were selling on the cheap in many cities across the nation.
Fast forward to spring, and the housing market kind of “sucks.” There’s really no other way to put it.
First off, there’s no inventory. This has been an issue for a while now.
Put simply, there’s just very little out there for an individual or family looking to buy a home, at least in the areas they might want to live.
Sure, there are those properties that have been on the market for months, but there’s a reason they’ve been on the market for months.
And yes, you can probably go to a new community built by a mega homebuilder and find a house, but it’ll likely be on the fringe of a major city next to empty dirt lots and tractors.
Bad Inventory Rising
Now that the housing market is heating up and the media is (rather obnoxiously) getting on board, inventory is finally rising. Let’s call it an inevitable timing thing.
You see, there is real hope in the housing market. And while hope is good for some, it’s not good for buyers, just sellers who finally see the light after so many years in the dark.
Today, these would-be sellers are able to push the values just that little bit more to sell them as standard sales, instead of going the formerly popular short sale route.
After all, a short sale made sense when there was no hope of getting out unscathed, but now that things are looking up, why not hang on a touch longer and avoid the negative ramifications of selling short?
Unfortunately, this means the individual on the other end is picking up the slack at an inflated price, instead of snagging a deal.
Competition Is Extremely Fierce
Factor in the intense competition and you’ve got a double whammy on your hands.
We’re talking inflating the listing price to make it a standard sale, then receiving multiple bids that often push the final sales price above the original ask.
In other words, today’s buyers are acquiring properties with the future home price appreciation already built in.
And that assumes prices actually do increase – it’s not a foregone conclusion, just a rosy expectation at the moment.
I’m also seeing a lot of the notoriously bad properties rear their ugly heads again. Many of these homes sat on the market for months without a single offer, but now they’re going into escrow in a matter of days.
Something is definitely wrong with this picture. I don’t care how low mortgage rates are…
I’ll Wait for Another Dip
If I wanted to buy a home, I’d hang on and wait for the temporary madness to come to an end. There’s clearly a bubble mentality in the air again, with everyone and their mother bullish on housing.
Whenever that’s the case, it makes for a rather ominous situation. The increase in inventory involves a ton of previously underwater homes that no one wanted, even at lower prices. Or homes that were taken off market and abruptly thrown back on the MLS.
So why would you buy these same homes today at a significant premium? Because a magazine cover said, “Housing Is Back?”
The economy is still in tatters and things don’t exactly appear bright. If anything, a looming stock market crash seems to be on the horizon.
No, the sky isn’t falling, and housing is indeed on the mend after so many off years. But I do see the current cycle as an unsustainable period of growth that will likely unravel as the year goes on.
It’s going to be a bumpy road to recovery, not just a bottom followed by a surge back to new highs. We’ve seen this optimism in past years, only to watch the wheels fall off time and time again.
If you see something you love, go for it. If you’re worried about the missing the boom, you might want to sit down and reassess the situation.
Read more: Buying a home during a seller’s market.