Being a home buyer over the last three months has been very stressful for many and not very rewarding for some. Bidding wars have been rapid and for the first time in many years they are rampant just about everywhere not just in Greater Boston.
This can be very frustrating for buyers as many have made offers on multiple homes and not landed any of them. Some have even given up and re-signed leases for another year.
Buyers become filled with all kinds of mixed emotions and questions like the following which we will answer at the end.
Sound familiar? This is how many feel and it is understandable to feel this way and get discouraged after making even one offer and not getting a home never mind offers on multiple homes.
Why does this happen?
It happens because of the simple functions of supply and demand. The fact is every single winter and early spring there are more homes buyers out looking to buy than there are sellers listing their homes. Inventory is at its lowest point in the winter and that is why we have for years said that Listing in The Winter makes you the most money.
More Buyers than Sellers
There is no exact way to quantify how many buyers there are for every home that is listed but there are substantially more people looking for homes to buy in the winter and far less inventory. This is why in the winter and early spring it is a Seller’s Market! During these months there are more homes with bidding wars and properties sell very quickly.
When will this imbalance end?
It already has started letting up slightly although many buyers may not be seeing it yet. Every week that passes the amount of homes for sale increases and the amount of buyers who have found homes increases too. So as a buyer you have to remember that your competition is the other buyers. As they find homes you have less competition. If you look closely at the line graph above you will understand why Bidding Wars always slow down by summer and are rare in the fall. When buyers have choices and less buyers to compete with the slow down and have more time to look. We are already seeing early signs of this. Homes for sale in Massachusetts and Southern New Hampshire are increasing but at a slow pace. It is tracking about 5% less homes for sale at a given time than last year at the same time and about 10% less than a year before.
Is no one listing their homes for sale?
This is the biggest misconception out there among buyers and even many Realtors. From January 1st 2016 to May 8th, 39,148 homes have been listed compared to 36,917 at the exact same time last year. This represents over a 5% increase. This comes as a surprise to many. Even many Realtors don’t realize that this many homes have been listed. See housing inventory levels right now are like the game of PAC-man. Homes are being eaten up almost as fast as they are being listed.
What should a buyer do?
The first thing a buyer needs to do is make sure they have hired a Realtor who is truly working with them to find them the right home. Also, find a Realtor who is at a brokerage that can provide you with all the homes for sale as they are listed without delay. From there the best thing a buyer can do is continue to look, try to have some patience and be ready to strike without wasting any time when the house you want pops up. You have to remember that if you see a house you like and consider it a good deal you will not be the only one who feels that way. Then when you do write up an offer with your Realtor be sure to follow our 5 Tips to Winning a Bidding War.
Now to quickly answer all of those questions and concerns above:
Will it be like this forever? – No the bidding wars will slow down by summer and will be much less typical in the fall when it is the best time of the year to buy a home due to the high amounts of inventory.
Will I ever land a home? – Yes, if you keep trying eventually it will work out, you just need to be patient.
Maybe I need a new Realtor? – This may be true. If you have an agent who isn’t providing you with every home that is for sale then you may need a new one.
Maybe I should give up and sign a lease for another year or two? – This is a terrible idea as you will run into the same situation next year if you try to buy at the same time. In addition, you will waste more money on rent and miss out on a years’ worth of appreciation.
I will just have to overpay? – Something is only worth what a buyer or buyers are willing to pay. If you and other buyers are willing to pay a certain amount then it’s worth it!
Why isn’t anyone listing their homes for sale? – People are listing but the homes are selling almost as fast as they are being listed.
Is this another housing bubble? – Anything is possible but it is highly unlikely as this boom doesn’t compare to the last one. Years ago everyone was able to get a mortgage. That is no longer the case. In addition when the market crashed in 2007 there were more than 45,000 homes for sale in Massachusetts and that is why the market tipped over. Right now there are 18,000 homes for sale. Furthermore prices over the last few years in Massachusetts and New Hampshire have only gone up about 5% per year. That is nothing like the bubble of years ago.
Maybe this is a sign that I shouldn’t be buying? – The real estate markets supply and demand imbalance all over the country is not a sign to one buyer that they should not buy. We live in a land of free and open markets. Right now the market is hot and it is a sellers’ market. If you want to own you have to be patient and diligent.
Will my town still hold its value in 5 years? –Real Estate is locally focused so if something major changes in a specific town then anything is possible but generally speaking it is highly unlikely that values won’t hold in the years to come.
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