With such low inventory, is it smart to wait a year and assume inventory will go back up? (RE agent, 1%)
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It's never safe to assume anything. Rates could be higher, inventory could be even lower, everything could be the same. If you're looking long term and you're happy with what you can get for the price go for it. My opinion is that nationally we'll see a reset somewhere in the mid 2020's.
Supply is even tight in rural Utah where there are very few jobs. The homes seem to be bought up in multiples at a time, which makes me assume that investors are buying swaths of homes no matter where they are at this point. The Wasatch Front "Silicon Slopes" is one thing, but tiny towns not adjacent to scenic parklands that are 50+ miles to the next gas station are another.
Ironically, the demand for inventory is not driven by time or waiting, but by demand and sales. Many who have been underwater since 2008 are beginning to see prices get back to where they no longer take a huge beating -- and putting their houses on the market. However, unless one is moving to or buying in a different market, the replacement costs will eat up any gain in one's sales price. (The old "rising tide raises all boats" situation).
About the only way to really build inventory to the point where it drives prices down ...is to have another market crash (ie; 2008). In that case, the reigning train of thought is 'hold off buying until prices are at the bottom.' (BTW, the 2008 RE Market crash was virtually unprecedented in American history since the Great Depression, thus, few intentionally anticipated or responded to take maximum advantage of the situation.)
Waiting for RE market inventory to increase enough to drive prices down -- is much like trying to catch the top/bottom of the stock market. One might get lucky with their timing once in a while, but, nobody has a crystal ball. If one has a valid reason for selling/buying, then one should do so while the reason exists, rather than trying to 'time the inventory or RE market.'
Another issue to keep in mind is record low interest rates will not last forever. One might wait for inventory to increase and prices to come down, only to discover that rising interest rates have negated the advantage.
The recent thread on low inventory brought back memories of 2005-2006. Back then it was more about rising prices rather than low inventory, but the effect was the same. A few people I knew then got caught up in "must buy now while we still can" fever. Then they wished they had waited a year, because prices went back down.
I can only speak for the areas I'm familiar with. In Phoenix metro area, both inventory and prices are absolutely nothing like it was in 2006. Eleven years ago there were basically no open house signs... I'd maybe see one FSBO open house sign over the course of a month. You could drive through neighborhoods with hundreds of houses and see ZERO for sale signs up. All of the new home developments within commuting distance of the metro area had waitlists in order to just get chance at a building lot... either it was a lottery or "first come first served", and if you did not reply within hours of e-mail notification you were out of luck and back to the bottom of the list. I had never seen anything like it... truly insane.
A year is not a lot of time in the real estate business. The market in Phoenix cracked in the summer of 2006, but didn't bottom out until probably early 2011. I'd guess people who bought in 2007 are still below their purchase price... not sure though.
Where is all this demand coming from? Do we really have that many more people in USA than we had say 10 years ago? I though if anything we lost population, especially middle USA lost population to coastal high cost of living area. So why is there less existing house
In my mind new home owner (millennial) buy a home that someone else once lived in, most likely baby boomer. That baby boomer then buys retirement condo somewhere south. so the only place I expected to have shortage is in retirement destination. But it seems like new home owners are finding it hard to find house.
Where is all this demand coming from? Do we really have that many more people in USA than we had say 10 years ago? I though if anything we lost population, especially middle USA lost population to coastal high cost of living area. So why is there less existing house
In my mind new home owner (millennial) buy a home that someone else once lived in, most likely baby boomer. That baby boomer then buys retirement condo somewhere south. so the only place I expected to have shortage is in retirement destination. But it seems like new home owners are finding it hard to find house.
Just because that's what's in your mind doesn't mean it's how it works in reality. My state is adding about 100,000 new people a year and they all need to live somewhere. And this is not a southern state retirement destination, most people are moving here for jobs.
Just because that's what's in your mind doesn't mean it's how it works in reality. My state is adding about 100,000 new people a year and they all need to live somewhere. And this is not a southern state retirement destination, most people are moving here for jobs.
Where are these people moving from? and is there surplus of home in the state they moved from. I understand short-age in "hot city" but it seems like entire country is in shortage of home. Was there lot of babies that were born 30 years ago (more than the usual 2.1 kid per couple) or has there been lot of immigrants in last decade
In my area, the prices are being driven by the fact that there is no inventory, partly because no one has been building for the last few years. They are building now, but not enough to keep up with demand, so bidding wars continue and prices are still going up.
I don't think it is going to burst, because this is real demand for homes to live in, not investors. So my guess is that a year from now, the construction will have eased the low inventory levels, but prices will be a lot higher. So less bidding wars, but at a higher overall price.
I would be surprised if inventory had increased significantly in my area by this time next year. I mean never say never, but, I think it's either going to take a significant increase in inventory and/or interest rates going up significantly.
The next few years will be very interesting. It does make me glad that I sold and bought last year, rather than waiting as I had originally planned.
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