What does the inflated market mean to a Happy Homeowner?
What do owners need to know about the current real estate market? Prices have taken an upturn. So it is a great time to sell. Maybe. Maybe not.
Speaking solely of the dollars and cents of it (not the needs of your household):
- If you are considering a move to a smaller place in the same town – or same type of town- now is a good time.
When prices are up, the additional equity you have in your bigger, more expensive place is greater than the increase in price of the less expensive, smaller place.
- If you are considering a move to a cheaper place in a less-desirable town to save on costs, now may not be your best time.
During price inflation periods, second and third-tier town see their prices rise. But, they take longer to recover after the next downturn. Economically, the best thing to do is to sell as close to peak as you can, then wait for the downturn to buy your next house. If you can stand renting for a couple of years, your wallet will thank you.
- If you are considering a move to a bigger place or a more-desirable town to establish a long-term school-centered homestead, now is not be your best time.
Economically, price inflation is steepest in towns where the schools are well-regarded. You will be paying a premium to move now that you won’t recover by the increased equity you have in your current, smaller or cheaper place.
The true bottom line is that most people do not buy with only the economy in mind. People move for their living needs. Therefore, we are busy trying to get our clients the best deals in any situation.
If you are considering a move, this is what we have been experiencing this calendar year:
The spring started late because of the snowy winter. Then it got very busy, but with an inventory shortage that drove prices up. Average prices in most towns we serve sell above asking price. This is because, in this market, it is working for the sellers to underprice to create bidding wars. Because of the auction environment of bidding wars, some buyers are getting caught up in the “win at all costs” mentality. Part of our job is to keep our clients from being the people who overpaid because they lost their head.
Our report card, first half of 2015:
• No clients waived their home inspections in order to buy a house.
• No clients waived mortgage contingency unless they had cash resources to close without a mortgage.
• All but three of our clients bought in bidding wars.
On four occasions, we were told that our client’s accepted offer was not the highest offer.
On three of those occasions, we were told that the letter we wrote, with our client’s input, made the difference.
• Total amount under asking negotiated by clients not in bidding wars: -$41,000
• Number of properties we referred to listing agents: 7
• Towns served: Cambridge, Somerville, Arlington, Boston (South End), Waltham, Woburn and Quincy.