Superbowl Sunday has traditionally been the start to the real estate "Spring" selling season, but this year here locally, in Gilbert, we've seen an early kick off with buyers trying to lock in a home. What is missing from this traditional equation is the home listing inventory for buyers to choose from.
In my previous blog post in January regarding the Gilbert real estate market I reported 330 active homes for sale which was down from 423 in January 2019. As of writing this, Gilbert has only 288 homes available for sale.
As the Christmas and New Years celebrations become a fading memory we usually see the listing inventory start to increase. Although homes are coming to the market, they are very quickly being snapped up by home buyers. What is more prevalent today than in previous years is the number of institutional investors now in the market. I'm not only talking about the Opendoor and Offerpad, We Buy Ugly Homes etc. house flipping models out there, but Real Estate Investment Trusts, REITS, who are buying multiple properties throughout Maricopa County with a 5 to 6 year hold strategy.
With property prices steadily increasing due to low supply, low interest rates and high demand the sooner a home buyer can get locked into a property the better. The longer a home buyer waits, the more competition there will be for the same home and potentially the more they will inevitably have to pay.
All to frequent questions I am being asked in this market are "Is the market going to crash?" or "When do you think the market will crash?" These questions are fueled by peoples memories of property prices rising during the early 2000's and then the disaster that was 2008 and what then followed. My answer is firstly, I honestly don't know what will happen, I'm not an economist, however what I can tell you is that the fundamentals that created the 2008 crisis of loose lending and other financial shenanigans are not present in today's lending landscape, also, if REITS are buying in today's market with a 5 or 6 year hold pattern, do you think that they are predicting a housing crash in the next 5 or 6 years? Unlike me they are economists and so if they're buying and holding then that would suggest that property prices are set to continue increasing. When you see these companies start to shift their exposure away from the housing market, that may be the canary in the cage to possibly think about selling.
The rules in play here to secure a property do hearken back to 2005 where a buyer needs to put their best offer forwards. This may feel as though they are over paying for a home that shows well and also checks all the boxes for a large number of other buyers, but unless something changes and our inventory magically increases, then prices will inevitably continue to rise and they will be glad they purchased when they did.
In summary, its a great time to sell here locally, unless you have to then turn around and buy another home in a desirable price point.