A few years ago, it was a seller markets. In the Baltimore area, a home would list on Friday and a contract would be signed on a Monday. At the latest, it took until a Tuesday until it was finalized as buyers would compete with each other to get the house. List prices were the starting point, not the ending point, and if you really wanted a home you’d have to pay top dollar. The home I now own was listed at $270,000, I paid $295,000, and a competing buyer offered as much as $330,000 for the home*.
Today it’s totally different. I believe that right now, and for the next six months, you’re seeing the lowest point for sellers from a psychological perspective. Whether or not the housing market is actually at the bottom of the valley remains to be seen but I think we’re at the lowest possible point a seller can be and still keep their home on the market. If the market gets any worse, you’ll probably see any optional sellers, those that don’t have to make a move, pulling their homes off the market if they haven’t already. Homes that have languished on the market for months will probably slide a few renters in to tread some water and those foreclosures? Scooped up by opportunists or just left sitting on a bank’s balance sheet.
Why do I believe that we’re at the low? The stats don’t lie and there are only so many punches you can take. Home prices take the largest tumble in 25 years? Homeowners and builders offering all sorts of freebies like leases on cars and free appliances. I mean it’s so bad that the government is stepping in and thinking about freezing ARMs in order to stop the bleeding. Oh, and to pile on even more, it’s now winter which has historically been the slowest season for home sales.
If I were in the market, I’d probably turn to new constructions first because builders need to move inventory. They aren’t like regular sellers where they can opt to just live in the house a little while longer, they need to free up the capital they’ve invested so they move onto other opportunities. They are also more likely to offer up huge incentives for buyers because of this need to rid themselves of inventory. If new constructions are out of your league, I’m sure there is plenty of inventory in most of the US so pick your spots and you’re likely to find yourself a great deal.
What do you all think? Things will get worse? Much worse? Things will get better?