For almost a year now, I have been saying the worst of the market is behind us. I based that mainly on the fact that it was about that time when buyer’s seemed to lose the fear to buy a house. Now that all the news reports are in agreement with me, thought I’d talk about what is next.
Rewind for a minute here. The past several years have been pretty easy for realtors to understand the market. Prices were pretty flat except for a big decline in 2007 and after the tax credit for first time buyers expired. If a house sold for $XXX,000 six months to a year prior, it was probably worth that still, but you went in lower just to test the seller. Those days are gone, especially for the most desirable locations/neighborhoods.
Take for example, Andover Hills. I own a house I use to live in over there, so I watch that neighborhood closely. Houses that were selling for $220ish are now going for in the low to mid $240’s. The first one that went for this kind of money, I thought was a fluke. Then it happened again, again, and again. Back a few years ago, you needed one that was totally updated to pull that kind of money out of a 4 bed/2.5 bath 2300-2500 square foot home without a basement. Today, the ones that are all original (meaning 15 year old HVAC, original windows, old cabinets and counter tops) are getting that same money. Why? School district. If you want a good elementary school in that part of town it is about your only choice. This same thing is happening in other neighborhoods that have something special about them. Ashland Park and Chevy Chase are other neighborhoods where prices have gone up. I had a client wanting to buy in the $300-600k range and just about every house sold as soon as it hit the market. Two years ago, houses were sitting on the market forever in those areas, even the nice ones. My people felt lucky to get the one they bought!
So, what is around the corner? I am shocked that it hasn’t happened yet, but surely all those people who tried to sell as the market was circling the drain will eventually put their houses back on the market. They might just get what they wanted for their houses now. I think as long as interest rates stay pretty low, we’ll see a good market and increasing prices. At the moment, people are so thrilled with how much house they can afford, they aren’t all that concerned about getting it at a rock bottom price….They just want to get a signed contract on it before somebody else does. Also, the price increases in the top tier neighborhoods will pull up the 2nd tier and so on. There has to be enough of a difference in price to make a buyer go for their 2nd choice location though. Don’t think we are quite there yet.
It is a whole new exciting ball game right now. I like trying to keep up with it and see where it is going.