Houses for sale are in short supply. Multiple offers are the rule, not the exception. What is pushing this sellers market? How much longer can this market continue to rage on?
First, we have to look at the reason why there are too many buyers, and not enough sellers. The reason why there are too many buyers is because the birth rate spiked 1980-1988 as the early and middle BabyBoom generation had children had children of their own, creating a second baby boom. That second baby boom generation has now come of age for buying their first homes, and their move-up homes.
Meanwhile, there is not enough inventory to meet demand. Homeownership has been at an all-time high for the past four years. A study of demographics by real estate and mortgage expert, Barry Habib, president of The MBS Highway, a mortgage trade publication says we have four more years of high demand from the second Boomer wave. What this means to you is the best time to buy a house is now. Habib's study of the market shows why the market will remain strong for another four years.
Going forward, the market will favor sellers so long as houses are in good condition, and properly priced for the market; buyers are flexible but they are not idiots, willing to pay top-dollar for a house at the bottom of the barrel.
Bottom of the barrel houses are selling mostly to investors for 50%-60% of great condition value. Investors typically buy a house that needs a total rehab, put $100,000 into it, including a painted exterior with updated light fixtures and landscape an open-concept interion with the kitchen centered by a big island, newcabinets, stone countertops, wide-plank hardwood floors throughout, modern tile and fixtures in the bathrooms, and inviting outdoor living space, and a landscaped yard.
I have seen rehab houses sell for $525,000, get a $100,000 rehab, and sell for market value at $755,000 with multiple offers ninety days later. That's a $130,000 return on investment in three months. The investor used money from a "hard money" investor to buy the house and obtain the $100,000 needed to update the house, generating $16,000 interest to the hard money invester for the use of the money.
If you have a house that is less than perfect, and you are willing to let a General Contractor (GC) renovate your house before you sell it, you can get a home equity loan of $100,000 from your bank, or a loan from a hard money lender who will fund the renovation. I don't recommend this for houses with less than $200,000 in equity.
My phone is 703-929-2274.