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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.
Will the same be true this year? If people wait for a year will inventory return to normal levels (and the pickings be better)?
Or is this a different situation, since low inventory is mostly due to not having much new construction in recent years, plus Millennials starting to buy en masse as well as Boomers buying retirement properties (both trends that will only grow stronger over time)?
Just to get the ball rolling, here are my two cents:
I think if you can wait a year, inventory will start to build back up to normal.
True, you could argue that a lot of people who are waiting on the fence to sell may decide to sell right now because inventory is low (thus continuing the cycle, since they wouldn't be selling at the time they normally would have).
But I think inventory will grow anyway, because builders have or will start building again. Plus no matter what the current market is doing there will always be resales due to last minute job transfers, deaths, or various other reasons people suddenly need to move to a new place.
This is completely location driven. In the Dallas-Ft Worth metroplex, prices are continuing to rise with no end in sight. More and more companies are moving their headquarters here, thus more and more people moving in. NOt so much so in smaller towns.
Location. In my area the inventory has been tight since 2012. We bought on the fear of "we won't be able to get in if prices go up 10% more", just as you describe. Boy, am I glad we did.
My neighbor bought their house in April of 2012 for 343k. They just sold for 555K.
Always, always location. If it's a desirable place already, how is there going to be new inventory, when more and more people want to live there? Even deaths, moving, etc. won't increase inventory beyond demand.
Those that waited a year last year are seeing prices 10% higher.
In my area, homes haven't fully recovered to pre-recession prices. Since homes are going under contract so quickly and the prices are going up steadily, I think that most that don't have to move will wait until the prices have fully recovered.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by OhioToCO
Location. In my area the inventory has been tight since 2012. We bought on the fear of "we won't be able to get in if prices go up 10% more", just as you describe. Boy, am I glad we did.
My neighbor bought their house in April of 2012 for 343k. They just sold for 555K.
I agree. In our city there are several new developments under construction but the homes are selling for over 1 million. The buyers are not people selling a smaller, older home, they are newcomers to the area taking tech jobs at Amazon or Microsoft. With the median price close to $800k and being a low crime area with great schools, people are staying put, so the few existing home sales are fast, most over asking with multiple bidders. It would take a severe recession with big layoffs, like the 2008 recession to increase inventory here. Even then, our house only dropped to about $400k at the lowest point.
Our plan was to be in this house for 5.5 years, thus sell in spring 2020 and downsize. However if interest rates are high, we will probably just stay put in our current loan until we can sell and pay cash for the next place. Wonder how many are like us. They don't have to move and won't see the point if there money won't go very far.
It's becoming much less location dependent. Even Spokane, WA is showing a massive shortage in housing units, which has caused prices to climb. Spokane, WA!
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