Why houses are so expensive, when real estate home seller’s market will end.
When you work in real estate long enough to experience the shift in markets, it’s easy to see the signs. To understand what causes the ups and downs in property prices and customer demand. When most of us only buy or sell a house or home once in a lifetime, it is not so plain as the nose on your face to stay ahead of what’s happening. To make the most of whatever Maine real estate market a buyer and seller have to work with on any given day.
This blog post explains why house prices are so high, why real estate is this expensive.
And when this real estate home seller’s market will end. Everybody thinking about buying or selling a home wants to know the answer to that last question. Because real estate property listing purchase and sales are the biggest expenditure most ever make in their lifetime.
So for starters what is going on now and what caused the way the real estate market behave today in Maine.
Real estate market reports done earlier reported that pre-COVID, the Maine housing market was already healthy and listing sales brisk. The pandemic just added gas to the fire and furry.
Meanwhile, as the price of materials to build a home or renovate an existing house went skyward, that development only added momentum to the existing real estate market house sale numbers in Maine. It created the perfect storm to create a seller’s real estate market as inventory of housing units dwindled.
So why are houses so expensive?
Simple. Lack of supply, plenty of over the top demand. The real estate market in Maine was already humming along nicely. Then as the house listing inventory continued to shrink, that made the market even stronger for home sellers. Home buyers had less options.
And not everyone can pull off a construction loan or wait for a new home to be hammered out and erected. For anyone needing a home right now, the lack of inventory caused by house sales out pacing new property listing, a feeding frenzy ensued.
If you want a home, you had to bid above and beyond with few if any contingencies. So a seller would pick you over the many others wanting the keys to the front, side, and back doors of the same Maine house listing.
The inventory of property listings if nothing new was listed in Maine from today forward is only about a 1.3 months supply.
Great situation and don’t change a thing if you are a seller wanting to get above and beyond top dollar for your Maine home. But slim pickings and the inability for many to step out to build from scratch buyers is forcing buyers to wait. Or make the most of what is available for housing inventory listings in Maine today. And if you do decide to buy today, you better be Jack Nimble quick about it.
Multiple contracts, many buyers for any properties that are available means it’s like adult musical chairs. Tempers flare. There is a lot of pushing and shoving like around the department store bargain bin.
The frustration for Maine home buyers that want to climb out of the rent rut only intensifies when it is a tight seller’s real estate market like today.
The first time home buyer has it the worse. The retired moving from another state that has already sold their existing home for big dollars can pay cash on anything they want in Maine. That cash buyer is like trying to win a hand with a pair of sixes and the out of state cash buyer has a full house or royal flush card hand.
As a Maine real estate broker for 42 years, this is not the first seller’s housing market witnessed.
The pushing and shoving is intense among buyers tired of being told you are too late, the house is under contract. Sale pending quickly happening on any new home listing in Maine is like a rejection letter from a mortgage lender. And if a house buyer does not get pre-approved for their home mortgage loan before hunting for a roof over their head, some of the frustration is the purchaser’s own doing.
The time wasted trying to get pre-approved or making an offer on a place that does not have a chance of getting accepted only causes frustrates a desperate home buyer more. And when a cash buyer blows that gotta get a bank loan purchaser out of the water time and time again, the tempers flare and stress cracks appear.
How to deal with a seller’s housing market if you are the property owner?
Where are you going after your have the real estate closing for top dollar? The same Maine real estate market that rewards the wallet you sit on or purse you carry is going to demand spending more for the next four walls, floor and roof.
Better have a place to leap before you list your Maine home in today’s real estate market.
For buyers, consider buying land, slowly building a home. If you have a big chunk of change and time it right to be the first guy or gal out of the gate for a spring building or late fall construction project, getting in out of the weather can happen. The home construction process is a whole lot easier if no bank mortgage lender is breathing down your next or holding a stop watch ticking loudly.
Whenever you can take your time, if the stress of mile stone deadlines are removed in the housing building process, good things happen.
The difference in the taste it leaves like slow cooked compared to fast food hurry scurry. The shift from a seller’s home sales market to one that favors buyers will happen. That’s how real estate markets work, up down and steady she maintains the course in the middle. When more selection of houses becomes available, the increase in choices for home buyers will bring property prices down. As less folks step up to buy a $20 board at the lumber yard, house construction items will also come down as the building market cools off and competition for sales increases.
The advice if you must buy a house today is save hard, consider investing in a lower cost home market like rural Maine.
Buy something with apartment income potential and don’t just think of buying the last home you will ever own. Investment properties are always a sure bet because folks have to live somewhere. I know the apartment vacancy rate in my area of Maine is about 2%. And those not rented units are because they are being overhauled with repair work. Or a foreclosure sale that takes time to cure and for the mortgage lenders to reel it in through the court process.
COVID has back logged the court system and it can now take more than nine months to completely evict a house tenant.
Out of state home owners know selling to get out of the populated city centers makes sense if they can telecommute to work remotely from up in Maine. That they get above listed price beyond top dollar within hours of their place going on the market. And then find a much cheaper, often better property in rural Maine without a need for a mortgage. If they pack it up to head in the direction of Maine, no bank is needed on the next home purchase. No mortgage, free and clear happens moving from high priced crowded city setting to less populated, no crime, no traffic rural Maine.
So what does a buyer do again if housing inventory is tight and too rich for their budget?
They can wait it out and save like crazy. Or buy a piece of land and start slowly putting together the building blocks. Maybe invent in a duplex, triplex or something income generating where they can live in one of the rental units until the Maine real estate market cools off sufficiently to signal it’s time to consider house buying again. It is always do the best you can with the market that is. I know when I bought a first house in the early 1980’s the mortgage interest rates were 16.5% adjustable. I felt pretty savvy getting a 12.25% fixed mortgage lending rate.
I was only in that home for two years, sold it for a profit and moved on to a larger house for the family and a business location for my real estate office.
When demand is so high, interest rates so low and housing inventory practically nil, you are going to have a seller’s real estate market. To predict with any certainty (looking at my watch) and say that by August 12th at precisely 2:38 in the afternoon, a shift from seller to buyer’s market will begin is foolhardy. Never was the guy wasting time around the water cooler shootin’ the breeze with other agents waiting for someone to tell them to get back to work.
I grew up on a Maine farm and work.
That’s the secret to get the largest local market share of whatever real estate weather happening around you. Work hard, efficient and creatively. Remember listing inventory is always king. People are always going to have to buy and sell no matter what the real estate market.
Growing families have to list and sell unless they add on to the too small house.
Estate sales occur because of lack of money to carry the empty home of the dearly departed. Large homes that get too big for empty nesters means the couple or widow downsize and slide into something more practical and comfortable at this stage of life.
Why are houses so expensive, when will the real estate home seller’s market end?
When the number of housing units is much greater than the number of home listings available on the current real estate market. Those conditions signal a shift to a buyer’s real estate market. A buyer’s market also signals it’s time for sellers and their agents to ratchet down the listing prices. Over priced properties don’t sell in any market. Being proactive means systematic house price adjustments to bring them inline with the shift from seller’s to buyer’s market or one in balance. With listings coming online equaling ones put under contract or sale pending status.
During a seller’s market, the days on market house listing times are low.
As a property listing lingers and seeming develops shelf life dust or ten foot pole marks, it means the house price tag it wears is too high for the current real estate market. In a seller’s market, buyers go above and beyond and do crazy things in desperation to win the house listing contract bid to head to a real estate closing. In a buyer’s market, sellers do the same desperately daring things to often sell for less than they could have gotten out of fear.
The best real estate decision are made when there is no pressure, when the market factors are considered without being under major pressure.
Shop the market, learn what houses like this or that are going for so you can recognize a deal or see the pork. Miss the house listing that got away so you can be 20-20 on the next one that comes your way. Good things come to those with patience and that do their homework. Ask lots of questions.
Find a real estate professional you trust and that has memorized your gotta have, don’t want list and knows the best financing option for you if you have to use a bank.
In a seller’s market there is intense buyer competition for house listings.
In a buyer’s real estate market, the competition for listings is removed and the selection improves greatly. You have options and can take your time, pick the best low hanging real estate fruit when it comes along and stands out as one heck of a deal. No matter what real estate market you have to swim in, remember, put on your big girl and boy pants.
The offer you present if you want it to be accepted has to be realistic and inline with the current market. The contracts with a zillion contingents are not the ones you would accept if you were the owner, no matter how desperate.
Simply economics of supply and demand creates the market.
And COVID added another twist to the decision making of where to buy and when to sell a home. Regardless of whether a seller’s or buyer’s real estate market, whoever owns the property better have the listing neat and clean. The imagery, narrative, video components top notch and the real estate marketing far reaching with healthy frequency!
I will be watching the listing inventory supply and the tale of the days on market.
How close the listing price number is to the actual house sale figure. Hope this blog post on what causes a seller’s market and the shift to one where the buyer has the upper hand is helpful.
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MOOERS REALTY 69 North ST Houlton ME 04730 USA