Why are so many people still in the market, driving prices up? Isn’t it time for everyone to dial it back a little? The COVID tide has receded again, this time hopefully for good. People are getting vaccines and hoping for more ‘before times’ interactions, which should shift buyers focus away from real estate. With summer vacations this year and a back to school focus approaching the fall, can’t we expect more our typical dog days of summer in real estate? Interest rates have risen off their historic lows too, so shouldn’t the market start slowing and won’t later in the year or next year be a better time to buy?
First things first, nobody has a crystal ball and can tell you what the market will be doing a year or even six months from now. When I purchased my house in 2017 a lot of people thought that we had reached the top of the market. A good friend of mine who is not a Realtor told me she thought the market was going to go down soon. Over the years I’ve heard that same song from a lot of different Realtors. Realtors can be a cautious, even paranoid bunch. In fact, I remember going on listing appointments back in 2017 and talking to people who spoke to another top producing Realtor who urged the sellers to get on the market as quickly as possible before the market fell. My take then is the same as it is now, “It’s still a seller’s market and that isn’t likely to change anytime soon.”
So why buy in a seller’s market, when prices are going up? The alternative is to wait until there is a buyer’s market, which is pretty rare in Marin real estate, and then buy hopefully near the bottom or on a bounce up. But when will that be? Four years ago Realtors and non-Realtors alike thought the market was going to fall, and it still hasn’t. It’s only gotten crazier for buyer’s trying to get their feet into a door they can call their own. My point is there are opportunity costs to waiting, which are not limited to the following:
1) Not capitalizing extremely low interest rates
2) Paying someone else’s mortgage indefinitely
3) Not paying down a mortgage of your own, not getting the tax write offs and gaining equity
4) Being insecure about your living situation, as landlords sometimes sell and often raise their rents
5) Passing up an opportunity to own the home you want at a price you can afford, in an area where you’d like to be long term
6) Potentially getting priced out of the market. Unfortunately, these days as prices rise higher and faster I’m seeing more people no longer able to afford the homes they want
It’s no secret that real estate ownership leads to wealth creation. It’s an unfortunate reality for those who can’t buy a home that they miss out on the financial advantages of ownership. They miss out on the piece of mind that comes with paying your own mortgage and not someone else’s. As long as a buyer can afford it and they find the right house, now is still a great time to buy even if it means competing with other buyers in this hot seller’s market.