A week or so ago, the community section of the Arizona Republic wrote about home buyers here in Glendale (though it applies elsewhere) who found themselves caught off guard when the market turned from a buyer’s market to the current seller’s market which we now are in.
They put in two other offers in the north Phoenix and Peoria area, but were outbid within a week for one and within a day for the other. They didn’t place counteroffers.
“I wasn’t going to get into the bidding game,” Williams said. “It’s not worth it. There’s been no house that I’d want to do that with.”
Instead, they opted for fewer bedrooms and a mortgage payment that was higher than hoped.
I added the italics; it’s telling that the buyer decided they weren’t going to get into any sort of bidding war over the house they wanted, and instead settled for less but with a higher mortgage payment because of the change of interest rates.
Truth be told, it’s a little difficult to be empathetic if only for this reason … I and many others have been warning of just this scenario for a long, long time.
Before the market’s recovery began in 2012, buyers had their pick of homes and could low-ball offers, (the agent) said. Now, prospective buyers of a well-priced home in good condition can compete with four to nine offers within 24 hours of its listing, he said.
Not quite, at least in my opinion. By well-priced, the agent presumably meant “competitively priced.” But that still depends largely on the price range where the house resides. Anything under around $175,000 or so? Yeah, multiple offers are coming. Between $175,000 and $200,000? Possibly. Probably. Above $200,000? Not so much.
Also, the “pick of homes” has been evaporating for quite some time. Yes, in 2012 we saw prices rebound and inventory fall to only 7,200 detached homes across all of Maricopa County. But inventory of 15,000 homes or so, given the quick sales pace, still left us with only two months of inventory. Sure, you could write low ball offers on homes in 2011. You just weren’t going to be able to buy them in most cases.
(Side note: dear Republic writers … come talk to someone who has a more solid grasp on the market here in Glendale/Peoria)
Two things are happening: Demand for homes is increasing as prospective homebuyers’ personal finances recover from the recession and homes are in short supply as builders significantly slowed new-home construction during the recession, said Michael Orr, director of the ASU real-estate center.
“We’re only in the second inning of this recovery,” Orr said. “People are going to be terribly surprised by how far prices rise over the next two years.”
Count me among those who will be surprised, especially if the Fed finds the cajones to ease back on its buying programs and interest rates continue to rise. Personal finances may recover, but higher interest rates are going to lead to scenarios like what the buyer at the top of the post faced – higher mortgage payments for less house.
To continue the baseball analogy, it may be the second inning but there are thunderstorms gathering on the horizon and bearing down on the playing field.
“It’s been a complete opposite from last year,” (an agent) said. “The inventory was low, but we weren’t dealing with such high prices.”
High is relative term, of course. These prices aren’t high except when compared to the lows of the market. If anything, they’re getting back to where they might have gone had the market not skyrocketed and plummeted over a five-year period. It’s called reversion to the mean.
As for the buyers here and others in similar situations, my advice now is as it’s been for some time. Get pre-qualified. Get working with a real estate agent. And don’t find yourself echoing the sentiments of John Greenleaf Whittier …
For of all sad words of tongue or pen, The saddest are these: ‘It might have been
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Speaking of Glendale homes for sale, take a look at a few of the latest available here in Glendale built since 1995 and priced under $200,000 …
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