A potential buyer mentioned that the market was feeling bubbly, and they were wondering if they should wait to buy until things settle down later this year.
First, let’s describe what we need.
We need to find the right house at the right price with the right sellers and the right listing agent.
Any of the four can screw up your chances of securing the right buy. If the price is right, but it’s not the right house, would you buy it? Probably not. If the rest is good is good but the sellers need a 90-day rentback and prefer that their 8 dogs and cats never leave the house, you may not buy it either.
Getting all four to line up is a formidable challenge. As a buyer, you need to keep looking 12 months out of the year just to have a shot.
Other notes:
- In the off-season, the selection isn’t as good. But you only need one, so keep looking!
- Stay in the game just to keep your chops up. If you stop looking, but then come across a house that might be a fit, you may not recognize it because you haven’t been watching lately.
- Being active in the marketplace keeps you analyzing where and what you are willing to compromise. You don’t want to make a mistake here.
- Generally, the pricing isn’t going to change. We will see more than 90% of the sellers using today’s comps and tacking on the usual 5% or so to determine their list price. If there was a downturn, it wouldn’t be obvious until sales decline for an extended time.
Keep plugging – it’s only takes one!
The market IS bubbly theres no disputing it. The problem is gov and the banks are working together to keep prices high. Banks have figured out that if you simply dont foreclose prices dont go down. Gov has figured out that if you dump free money on banks that they wont forclose.
New/young buyers are screwed unless they have a large amount of cash to offset the imbalance.
Net/net…
Might as well buy. Even if bubble conditions exist. Prices arent going to go down any time soon.
Still renting because buying the exact same house in the exact same neighborhood we’re currently in would cost more than buying, even after the mortgage interest deduction. Which at these uber low interest rates, the standard deduction is actually higher than going with the MID! LOL!
Luckily our landlord has not increased out rental rate in over 2 years, so we just renewed for another year. Hoping 2017 will see some more price correction. And even if it doesn’t we’re still socking away money like crazy. Granted it’s not earning much interest, but at least it’s liquid cash! Hopefully the Fed won’t decide to impose negative interest rates on us (NIRP), like the Euro and Japanese feds have done.
The problem for us is that we can’t afford to buy what we like at today’s prices. Down payment, FICO scores, etc. aren’t the problem for us. We just don’t want to get locked into a high monthly payment for 30 years, which is what would happen if we decided to purchase an OPT right now! And with interest rates so low, doing a refi later wouldn’t work.
Crazy times we’re living in!
What makes me doubt we’ll see any major corrections during this “bubble” is that rents have streadily moved up proportionately (or even higher) vs home prices. Last couple “bubbles” it was substantially cheaper to rent at the peak. And we all know rent rarely ever goes down in desirable locations. This is probably the new normal folks.
Good point and with home prices so high, the demand for rentals is really strong.
It’s doubtful that rents would come back much, which should keep it all levitating.