I said the other day that it will become hard to sell. But wait – isn’t the demand overwhelming? Yes, but it’s a price thing.
It will be harder to sell…..at your price.
Think of the pressure on sellers now.
It was bad enough when the seller’s ego had to endure the actual or perceived pressure from friends and family about getting your price. It was probably more subconscious, than conscious, and nobody really had to say a word.
Sellers just think that their family, friends, and neighbors are all watching, and they want to show them. As a result, once a home goes on the open market, the seller’s ego wants all the money.
But then over the last year, sellers have been in this bonanza zone where bidding wars erupted out of nowhere and sellers got more money than they ever thought was possible. Way more than their ego needed, and sellers couldn’t wait to tell everyone how great it turned out.
But as the frenzy settles down, will sellers be able to cope without a tale to tell? Will their ego survive not having a bidding war?
In their mind, their opinion of their home’s value is built on top of the frenzy sales, plus a little extra.
Are sellers motivated enough to price sharply from the beginning, and/or lower their price early and often when it counts?
Probably not.
Hence, the frenzy environment has to continue, just so sales will happen.
Agents who have been in the business for 12 years or less only know a strong sellers’ market. They will continue to offer half-baked listings with 60-80 photos, no video, and a crazy price – and expect buyers to pay it. Throughout their history, buyers always have.
Sellers will now expect 5% over comps AND a bidding war to push it higher! Anything to the contrary will not go over well, and sellers and listing agents will be slow to react.
First you’ll see listings not selling, and inventory starting to stack up. Then sales won’t be as brisk as they have been over the last year.
Sales will suffer, before pricing does.
Keep an eye on sales. They are your leading indicator.
This is how the frenzy will end, it’s just a matter of when.
Jim, this is completely off-topic but I want you to hear this from the landlords point of you. I have several rental properties that I am renting out right now and I am getting slammed with potential tenants calling me in over half of them are telling me the landlords they’re staying at are currently selling their house and they have to find a new place. This is great for me as a landlord but I see a huge rental shortage crisis coming and wondering if you have heard anything about this? I have never had so many people tell me they need a place to rent because the landlord is selling. I can tell you I was really upset to say the least this year when the government told me I have to rent my place for free to tenants that are not paying — its equivalent to telling Costco that all the food and gas is free because we don’t want people in trouble. Anyways would love to hear if you heard anything or see this as a potential crisis coming for renters.
All I see is the trees.
It reminds me of the mechanic at the Mercedes dealer when I asked him if cars like mine had a transmission problem. He said he wasn’t a good gauge because he only sees cars with problems. I think he might have been coached on that answer though!
Is there a tenant crisis? Yes, when it takes $4,000/mo to rent a decent house in Carlsbad – if you can find one.
Is there an overall housing crisis? Yes, because the affluent are exploiting the problem, and making it much worse.