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I read an article this morning about my area, where they stated that home prices have risen over 75% since 2010, but median income has only increased by 4%. That is alarming and scary to me. Very few homes in our immediate area now that are less than $300K. Feels like every person from California is fleeing to our area and not sure where the end is in sight. Several homes in our neighborhoods with little to no updates are flying off the market within a weekend. Friends of ours attempted to bid on one, and it received over 30 offers within 3 days and sold for almost $30K over asking (granted, we live in one of the most desirable school districts and zones in the area).
Will be interesting to me to see if this is sustainable (especially with the property taxes we pay here in TX). I am a bit torn right now on if I should continue to beef up my next home downpayment fund to improve our affordability (we're looking to move within 3 to 5 years). Or if I should continue to gung-ho on my retirement. Seems that I can't have my cake and eat it too and it's an interesting thing to prioritize. My current thought is to bring our retirement savings from 18-20% down to 15% for a couple of years and continue to enlarge our downpayment. With higher interest rates most certainly coming, the larger downpayment will go much further is my initial thought.
One thing to consider if you are currently in a house. Are you considering moving because you want a bigger/better house or is it something else? If it's the former (and I say this to everyone who is considering selling and buying another) then maybe consider dumping some money into your current house to enlarge it or make it more of what you want as that may be the best way to go at this point.
If you can improve your current house without overbuilding for the neighborhood it's in the improvements could/will increase it's value in the long run and probably save you some $$$$.
I read an article this morning about my area, where they stated that home prices have risen over 75% since 2010, but median income has only increased by 4%. That is alarming and scary to me. Very few homes in our immediate area now that are less than $300K. Feels like every person from California is fleeing to our area and not sure where the end is in sight. Several homes in our neighborhoods with little to no updates are flying off the market within a weekend. Friends of ours attempted to bid on one, and it received over 30 offers within 3 days and sold for almost $30K over asking (granted, we live in one of the most desirable school districts and zones in the area).
The exact same thing is happening in SoCal. Only diff maybe the CA government is more crazy than TX.
I think you should make as your goal owning your retirement house free and clear. That way you are "living in a bank" and can always go reverse mortgage if your money runs out later in life.
Why would low inventory go back up? The only thing that is going to go up where you have low inventory is prices.
The only thing that will change low inventory is more supply. The increased supply would (AFAIK) result only from less demand or building more units.
Less demand would be fueled by either prices too high to afford, interest rates too high to afford, or some major disruption in the economy.
If either prices or interest rates, then the market will come to whatever new equilibrium it takes to reach a stable market.
My opinion is that in popular areas low inventory and increased prices will be the rule for the next few years. I also expect interest rates to trend up.
IMO anybody waiting for lower prices or higher inventory is chasing lost fantasies.
The only thing that will change low inventory is more supply.
Precisely. Many of the desirable areas to live in are already built up. There is not a lot of new inventory in many places that people want to live. So, prices rise.
That's what I did and I saved almost 60 grand but that was coupled with a local recession. If people are still getting really good paying jobs hand over fist then prices may not move down much.
I wonder how realtors feel about times of low inventory vs times of high inventory.
Do they prefer lower inventory because it means they don't have to drive clients all over town (plus the "duds" are more likely to get bought)? Or do they hate it because only the duds are left and buyers decide to not buy at all?
Why would low inventory go back up? The only thing that is going to go up where you have low inventory is prices.
It's all about supply and demand.
There are various reasons things can change:
1. In Williamsburg, the town I'm moving to, the reason will be a sudden supply of new construction. In the last few years building has ramped up big time, and in some of the developments the first houses are now appearing on the market. In the next year there will be more than a thousand new houses, which is a big increase for a small town like Williamsburg. So inventory is tight this year, not so much next year.
2. Nationally, any changes in the interest rate or in availability of financing may lower demand. Changes in international policies can slow or increase the number of foreign buyers, as well.
3. The herd instinct also affects inventory. When you hear a lot of your friends and co-workers saying "Must! Buy! Now!" and you had plans to buy in 3-5 years, it's human nature to reconsider the 3-5 year plan and buy this year instead. There are still the same number of people buying overall, so if they all start buying this year that means fewer people buying in 3-5 years.
4. Change in local employment. If a major employer starts laying off people or there is economic insecurity, people put off plans to buy a home. And others may decide to sell their homes to move elsewhere or just to get some money.
5. Change in demographics. Developments built in the 1960s, for example, were often bought by young couples in the same age range. Now those communities may see a dramatic change as the original homeowners start to die or move to another city. If the people who move in aren't considered desirable neighbors for some reason that can cause yet another wave of lots of people selling. Which would lead to increased supply.
6. Change in infrastructure. New highways, train service, air service are all things that can dramatically impact inventory.
1. In Williamsburg, the town I'm moving to, the reason will be a sudden supply of new construction. In the last few years building has ramped up big time, and in some of the developments the first houses are now appearing on the market. In the next year there will be more than a thousand new houses, which is a big increase for a small town like Williamsburg. So inventory is tight this year, not so much next year.
2. Nationally, any changes in the interest rate or in availability of financing may lower demand. Changes in international policies can slow or increase the number of foreign buyers, as well.
3. The herd instinct also affects inventory. When you hear a lot of your friends and co-workers saying "Must! Buy! Now!" and you had plans to buy in 3-5 years, it's human nature to reconsider the 3-5 year plan and buy this year instead. There are still the same number of people buying overall, so if they all start buying this year that means fewer people buying in 3-5 years.
4. Change in local employment. If a major employer starts laying off people or there is economic insecurity, people put off plans to buy a home. And others may decide to sell their homes to move elsewhere or just to get some money.
5. Change in demographics. Developments built in the 1960s, for example, were often bought by young couples in the same age range. Now those communities may see a dramatic change as the original homeowners start to die or move to another city. If the people who move in aren't considered desirable neighbors for some reason that can cause yet another wave of lots of people selling. Which would lead to increased supply.
6. Change in infrastructure. New highways, train service, air service are all things that can dramatically impact inventory.
And so on and so forth.
Thank you for a reasonable response to a strange question. Why do people think inventory will remain indefinitely low??? Except for certain specific regions that are highly built up already or are facing geographical boundaries that prevent building, the rapid pace of building right now is eventually going to ease inventory. Not to mention the fact that we can't all own 3 homes. I think any kind of policy change the limits foreign investors would have an impact in some areas too.
In any case, demand could remain high across the board, or not, who knows, but the inventory picture IS going to be different in a couple of years in many markets.
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