Why now is the best time to buy all year

At the risk of sounding like the stereotypical realtor who is always saying that now is the best time to buy, it really is the best time to be a buyer since before COVID hit.

Why? Lots of reasons but the biggest single reason is that we are seeing more listings hit the market at a time when most everybody who was going to buy a house in 2021 has already done so. If the market were a restaurant, picture that time when you walk into a very popular place that is hard to get into at noon, but you have arrived at 12:45 and there is plenty of seating.

This won’t last long though, which is why I think now is a great time.

I put on a new listing for $185k last week. We had tons of showings, some interested buyers, but only one full price offer. That hasn’t happened all year. One of the agents that showed it gave me some feedback. She said that her buyer opted to buy another house that was closer to her grandparents whom she took care of. I read that and I was a little shocked. It was the first time in the past two years I have seen where a buyer had a choice between two houses. Lately the choice has been the one house on the market or waiting for the next new listing.

The week before that, I put 3 new listings on the market. Granted all sold the first day, but two of them sold for slightly less that the list price and only got one offer.

I think the market will remain strong for years to come. It might not be the frenzy we have seen but there is no doubt we will have more buyers than sellers for quite some time. We will see what next spring brings. That is usually when we see prices got up the most. That is why I think between now and late winter might be the best shot you have for getting a house!

Is it a good time to buy?

This is a question I get asked a lot these days. People are worried about a housing crash and they dread the process of finding a home. It is not a fun time to be a buyer for sure!

My response usually is “Today is a better time to be a buyer than tomorrow will be, but it isn’t as good as it was yesterday.” Prices are going up every day between the whole supply/demand thing and inflation. I don’t see an end in sight short of some major economic crisis that creates a lot of unemployment and/or skyrocketing interest rates. (And keep in mind that we DID just have a major unemployment situation in 2020 due to COVID.) Even if either happens, there will be more buyers than sellers since people will simply decide not to move from their current home, which will create an even more out of balance supply/demand situation.

All this is pretty wild compared to 6-7 years ago. Back in 2014 I bought a rental house that had been on the market for more than 6 months. I was the only buyer and I offered much less than the list price and the seller was happy to accept it. I just sold that house for more than twice what I paid for it. Granted I did paint it, put new carpet in the bedrooms and replaced 3-4 windows over all those years.

So, if you are on the fence about entering the market, I say go for it. Sure, you will pay top dollar. You will probably have to bend over backwards to get a seller to even consider your offer. You might lose a few houses along the way. But what is the alternative? Keep renting? With all this inflation we are seeing, your rent is soon going to go up. And it will always keep going up. Meanwhile, the principal and interest part of your mortgage payment will always stay the same. All that can change in your payment is the property taxes and insurance amounts you pay.

When is the best time to be a buyer or seller?

One of the first things I do every day is look at ALL the new listings, look at ALL the price reductions, look at ALL the new pending sales, and look at ALL of the new closed sales.

Want to know some things I have noticed over the years?

In the spring, the number of houses selling quickly is higher than any other time of year.  More buyers are out.  There are usually fewer listings early in spring since most sellers want those first few warm weekends to work on curb appeal.

In the summer, we start seeing more new listings.  Sales remain strong.  Overpriced houses get overlooked.

In the fall, we see fewer new listings.  The frenzy slows down.  There are fewer multiple offers and fewer houses sell the first day or two on the market.  In an appreciating market, I also see houses that have been on the market for a long time begin to sell.  Why does this happen?  They were the overpriced listings in the spring and summer.  With prices going up, they have appreciated into their list price and now are competitive with newer listings.  Also, in an appreciating market, most sellers get greedy.  They want what their house is worth PLUS $5-10k.  Yesterday’s overpriced listing looks really good to a buyer compared to a brand new overpriced listing.

In the winter there are far fewer new listings but this is the best time to be a buyer.  Most sellers have been beat into submission by the buyers of prior seasons and are the most realistic they will ever be.  For a seller, the benefit is that your competition is typically just the other listings that are left over from spring and summer.  You stand a better chance of catching a buyer.

So, when is the best time to be a seller or be a buyer?

If you are a picky buyer looking for something specific, spring and summer because you will have more choices.

If you are a buyer who isn’t too picky, then fall and winter may get you the best price.

If you are a seller with a house that has been a buyer’s second or third choice all spring and summer, then your best bet is the fall and winter.  The reason your house never made it to be somebody’s first choice was because there was always a new listing that lured the buyers away from your house.

If you are a seller with a nice house and are willing to price it appropriately, then you will sell quickly any time of the year.  Your house will always be somebody’s first choice.

Now really is the best time to buy….REALLY

I know, I know……don’t realtors always say now is the best time to buy?  Or sell?  Or do anything?

It is a phrase that is often used to motivate anybody to do something sooner rather than later, but right now really is the best time to buy all year.

Why?

Let’s get the most commonly used reason out of the way:  Rising interest rates.  Yeah, a quarter or half a point doesn’t seem like much, but over the 7-10 years you may stay in your house, it could buy you a lot of other things, especially now that you probably won’t be deducting the interest you pay on your taxes.

The big reason is that the market has slowed down.  Sure, it always slows down some in the fall and winter, but this seems to be even slower than normal.   I haven’t had a showing where there was a line, or somebody coming or going while I was there in quite a while.  Less competition means you have a better chance of getting a house.  Listings are staying on the market longer too.  I am seeing a whole lot less of houses selling in 0-4 days and a lot more in the 5-20 day range.  That is still a really short time.  I am not saying the market is crashing or anything.  Just that the spring and summer frenzy is over.  Most of the people who were going to buy have done so already.  The ratio of buyers to sellers is more balanced than it has been all year.

I suspect it will be a slow winter followed by another frenzied spring and summer.  While I don’t think prices will go up that much next year, there will be more competition from other buyers than there is now.

So, roll up your sleeves and go buy a house, because it really is the best time!

Reading the real estate market in real time

One day this summer, I looked out across my backyard.  I do that every day.  All the time.  I love my backyard.

This time I noticed one of the pine trees in the corner had a bunch of brown needles on it.

I immediately reached out to my buddy Phil who knows just about everything there is to know about every plant there is.

He told me that usually once you see the needles turn brown, the tree is already dead.

I knew he knew what he was talking about, but just to be sure, I waited to cut it down until every needle had turned brown, fallen to the ground, and the branches snapped as crisply as the first Saltine cracker in the box.

That experience reminds me of the real estate market.  You never know exactly where the market is at the moment.  You just see the signs after the change occurred.

I got into real estate during the spring of 2005.  My first listing was in May.  I was so excited.  Houses had been selling for top dollar immediately.  I wanted to be a part of that.  The house took several months to sell.  I remember thinking, even as a newbie, that the house was priced right, had a good location, and statistically should have sold already.

Nobody knew it at that time, but the market was slowing down and was about to become the worst market in recent history.

After weathering that storm, I got to witness another change.  Early in 2013.  It felt like that first decent day in spring.  The one where you notice the sun stays up a little longer, you didn’t feel as cold as the day before.  Like that scene in Bambie where all the animals come out for the first time.

I was working with a really cool buyer named John.  He traded cars as often as I do.  He wanted the south end of town in an affordable price range.  We made a few offers on houses and lost them.  The offers we made were spot on within the recent comparable sales.  After the 3rd time, I told him that I felt like the market was improving, so all the sale prices for the recent comparable sales were going to be lower than what the value would be now.  We would have to made an adjustment.  Sure enough, as the ones we had made offers on closed, the prices were about 2% higher than the comps I had been using.  Meanwhile,  we had a backup offer on a foreclosure that he ended up getting.  He put very little money in that house and less than 6 months later we sold it for $41k more than he had paid for it.  By the time he sold it, everybody knew the market had changed.  The market had changed so much that even after the house sold, people were walking up and looking in the windows while he was home.  I told him to pull my for sale sign out of the yard and keep it in the garage until we closed.

So, where are we right now?  After such a hot hot hot market earlier this year, the market is really slow.  I don’t think it is in trouble or anything.  I just suspect that everybody who was going to buy this year did so in the first 10 months.  It has been a frustrating year for buyers.  I think a lot of them have given up on buying this year and are waiting until spring.  Sellers aren’t too happy right now either.  They have watched all their neighbors get multiple offers the first day on the market, but now they aren’t seeing the same thing happen with their house.

So, right now is a great time to get out and buy a house if you can find one you like.  We still don’t have a lot of choices, but you’re going to have more of a chance to negotiate and probably be the only offer the seller has on the table.  Historically, buyers come out of hibernation late spring and sellers start putting their houses on the market about a month later.  So you’ve only got about 8 weeks to enjoy this slow period.

The more of these changes I live through, the easier it becomes to notice them more quickly.

And now the same holds true for the trees in my backyard.