Why Is The Real Estate Market So Crazy?
Most people are aware that in the past year the real estate market has been crazy! Sellers are getting multiple offers on most properties and buyers are unfortunately involved in bidding wars for almost every house they fall in love with.
Most people who call me are asking me why the real estate market is so busy right now, so I wanted to pass along my thoughts. There are many factors contributing to this market that we are experiencing right now. One main factor is the interest rates. Interest rates are at historic lows right now. That enables buyers to purchase properties for a lower monthly payment than ever before. Typically, depending on the house, it is cheaper to buy than rent right now. So, for savvy buyers who were renting, they are looking at investing in real estate and building equity rather than paying a landlord.
Another factor to consider is that the generation of Millennials is getting older, they are moving out of their parents houses and looking to buy their own property. There are about 71 million millennials, even more than the baby boomer’s generation.
The low inventory is another big factor in why houses are selling so quickly. There is record low inventory throughout the area, Sterling and Princeton have been in the single digits for months on available inventory. Simple law of supply and demand is driving house prices up. But, why do we have such low inventory? The millennials buying houses is one part. Gen x and boomers are working and living longer than ever before, and many are finding ways to live independently longer than previous generations. They are not necessarily selling or moving into assisted facilities or family’s homes as in the past. Also, when the housing market shifted in 2008, many builders stopped building. This created a ripple effect that we are feeling now. Less houses being built over the past 10 years is contributing to the low inventory now. Plus, we have less land available and construction materials also cost more, especially with COVID, so new construction is limited.
So, with all of these things considered, I do believe that we will continue to see multiple offer situations on many houses and bidding wars for buyers in affordable price ranges through 2021. I took one of my buyers to see a property at the beginning of February. The agent told me they had 140 people come through the open house. Not only that, they had 71 offers! That is unheard of in any market, especially considering we were talking about a property in February which is typically one of the slower months in real estate. If you are looking to buy, make sure you hire an experienced agent that can help you position yourself in a way that stands out from the other buyers looking at the same house. It is not only about the price. There are other tricks and tips you need to use. Whether buying or selling, I am happy to meet with you to discuss the best way to move forward.