Unless you’ve been living in a cave for the past several years – and if you have, how did you get internet access to read this message? – you know we are in a very lopsided sellers market.
I am working with buyers who are wondering – out loud, so I can hear them – if they should just drop out and rent for a while longer. Perhaps rent for the rest of their lives.
I think this is a bad idea.
For one thing, if you can get a deal at, or near, what you are paying in rent, you are ahead as an owner. It may be a shopworn cliché, but that doesn’t make it untrue: with a mortgage, you are paying rent to yourself, not someone else. Gradually, equity builds. And you have a much better shot at itemizing your deductions which will pay off in April.
Three examples:
One: This Monday, I got buyer clients under contract. Their limit had been dropping with the rise in rates and this house was priced about $15,000 above their top dollar. I told the listing agent that my folks loved the house but could only offer to their limit, fully expecting that to be the end of the story. Two days later, the agent called me back and said they hadn’t had a serious offer and my folks could have it for their number.
Two: I’ve got my eye on a condo that a client likes but believes is listed about $25,000 too high. It is pushing the ceiling on comps, but it’s in a very desirable building, and I expected it to sell quickly. Eight days later, it’s still available, and we are circling back around. My client might make an offer.
Three: I’ve got a client who own a duplex. Several months ago, I was approached by a corporate buyer about selling, and my client asked $700,000. They came back and said the mid-$600s was as high as they could go, so no deal. The same buyer called me yesterday afternoon to see if there was still any interest in selling, but said lending in the wholesale space had tightened up and he could only offer in the high $500s.
Let me be clear! This is not a bubble bursting. Our fundamentals are still strong. I seriously doubt prices will go down – but the rate of increase may moderate. And the more aggressively priced listings will still sell – but at less than asking.
Let’s all keep our eyes on the prize, watch closely as things develop, and keep making offers.