Making sense of housing market conditions (updated March 30th, 2022)
The current housing market is characterized by at least two fascinating trends. First, there is record low inventory. This is at least partially due to global supply chain disruptions brought about by the 2020 Pandemic.
Second, low inventory has driven prices upward. Many parts of the Nation have experienced unprecedented growth in home values, and Sarasota is no exception. Florida has always been a magnet for Empty Nesters and vacation home buyers, but now, our smallish-Big City is drawing a larger and more diverse crowd than ever before.
In short, market conditions have created a home buying frenzy that has not shown signs of cooling down just yet. After rising 18.8% in 2021, Goldman Sachs forecasts home prices to increase by another 16% by the end of 2022.
Advice for home buyers entering the Sarasota housing market in spring-summer 2022
Have a strategy in place
Because houses are under contract within days of being listed, buyers must act quickly when submitting their offer. Additionally, it has never been more important to have a strategy in place to beat out competing offers.
Here’s a list of a few strategies buyers may consider (further explanation provided below the list):
- Making an offer at/above list price
- Consider an all-cash offer
- Remove contingencies
Making an offer at, or more often than not, above the list price. This is a reality in today’s market. With so much demand and so little inventory, prices inevitably get driven upward. Making an offer above list price is less than ideal, but always run the numbers before choosing to take a pass. As we covered last week, it is entirely possible the playing the waiting game will cost you more in the long run.
Remove contingencies. Buyers are being forced to consider cash offers and removing contingencies such as inspections to better position their offer for acceptance. Again, the decision to engage in either of these strategies is best weighed against the opportunity cost of waiting things out.
Anticipate an emotional rollercoaster. Then, always return to a grounded perspective.
Tactics never guarantee success. Even using the best strategies, the buyer may still lose out on several houses. This inevitably (and rightfully) causes the buyer to react emotionally, often jumping at the next house they find.
Barbara Corcoran, a well-known and respected real estate expert, advises buyers to ask themselves:
“What a house will do in a normal market. It is always in a normal market about location, location, location. Put your emphasis on the better location and the lesser house.”
If you are waiting for the “housing bubble” to burst, you might be disappointed.
Having experienced the “housing bubble” of 2006, many feel we are in another bubble. As a result, buyers are choosing to delay home purchase in hopes the prices will go down.
Related: Waiting for Home Prices to Drop? You Might End Up Paying More…
It’s hard to avoid these thoughts. However, consider that experts do not feel this is a bubble. Analysts typically point to two reasons:
- Today, prices are not driven by shady lending practices
- There are not many fix-and-flip investors in the market
To take a deeper dive on this, read The Fuel That Fed the Subprime Meltdown on Investopedia.com. Then, consider how those market conditions are very different from those of today.
To buy, or not to buy?
If you haven’t saved enough to buy a home, or haven’t found the right home, then it pays to wait. However, if you have saved enough and have found the right house, swift action may be your best choice.
As always, a real estate professional with market expertise is your greatest ally in navigating these waters.
About Diana Fischer
Diana moved to Sarasota in 1990 from New Jersey and started her real estate career in 2008 with Michael Saunders & Company.
She has a background in preparing and negotiating government contracts. Her previous experience also includes the medical field where she developed her listening and human relationship skills which have proved vital in real estate.
She understands that buying or selling a home is one of the most critical decisions people have to make. That is why she feels it is important to listen to concerns and objectives. This enables her to tailor the process to each individual. It is through her dedication, perseverance and compassion that she meets the expectations of customers.
Her designations include GRI and Green. While she loves cooking, entertaining, traveling and reading, her passion is Crossfit.
Interested in buying or selling your home? Contact Diana today!
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Sources for this article include:
Lawrence Yun, Chief Economist & Senior VP of Research NAR
Brian Buffini, Buffini & Co.
Florida Realtors® with data compiled from Stellar MLS
