Since property value has risen so much, pretty quickly and steadily I am getting asked the question are we at the top of the market? Well truth of the matter is if I could pick THAT, I would be a very rich man and if nothing else make the best decisions for myself. That being said lets take a quick look at some of the thing fueling the market now and what could change things.
1. Amount of homes for sale is still low. The lack of inventory keeps the market pretty hot.
2. More buyers than sellers. This is the fuel to number 1. See people are looking for homes and have been unable to find them, especially in the entry level market or more affordable ranges.
3. Low interest rates. Yes I realize rates are a little higher off their historical lows, but really? When I purchased my first property I had to BUY DOWN the interest rate to 12%! I have no love for those crying over 4% to 4.5% rates.
These items are keeping this market hot. There are all kinds of political theories etc…..but lets keep this simple for now.
What could make things change (will make things change).
1. More inventory coming to the market. Why would there be more inventory? Well in my opinion a few reasons. You will have your normal properties coming to the market AND what if the average time it takes for a home to sell increases a little? It may require some properties that HAVE to sell reduce their prices which when more homes come to the market gives the buyers more choices and it switches the supply and demand theory.
2. Distress properties coming to the market. When I say distress I do not mean foreclosures and/or short pay’s only. You see there are lots of people that HAVE to sell because of circumstances but fortunately for them have equity. What if prices come down just a little bit and some people that are distress DO become fore closures or short sales?
3. Continued rise in interest rates. If you had to make a bet would bet rates go up or go down? I would bet up and the higher they go up, the less amount of people will qualify for homes and if buyers cant qualify or get homes, sellers are unable to sell. See the pattern here.
I am by no mean predicting a market crash NOR am I predicting the market to continue on a historic rise. I am saying if you are thinking of selling and just sitting on the fence…….YOU WONT KNOW THE MARKET HAS TURNED UNTIL IT ALREADY DOES! Then its too late.—-Elgin Walker Ehustle@elginwalker.com 661.290.3781