Lately I have been running into several buyer clients that came out of the starting gate raring to go. Then, as the new reality of the sellers market started to hit home, a few of them got a big case of cold feet. From hemming and hawing to actually pulling a disappearing act, these potential buyers are making the decision to not make a decision. There are some situations where this inaction makes some kind of sense. But in an appreciating market like the one we are in, those cases are few and far between.
In 2011 almost all my buyers who were consumed with idea of “catching the bottom”. Of course common sense dictates that we don’t know where the bottom is until it is long past. Almost everyone who played the “catch the bottom” game lived to regret it. There is a take-home lesson here which is that most people sit on the fence far longer than they actually should. And this isn’t limited to market bottoms. We see the same thing in todays market. In many ways, this behavior is understandable because it is human nature to delay and procrastinate when such a major decision is in front of them.
This is a rising market and it is not just a NYC thing. This is an across the board sellers market. The issue is no longer whether a given market is rising. Its now a question of how much and how fast. Buyers need to understand that this is does not look anything like a housing bubble. Many of the same analysts that predicted we were heading off a cliff in 2007 feel that we are still fairly near the beginning of a housing bull run and that buyers and sellers should expect healthy price increases for the next several years.
This is being driven by two factors:
So what does this mean for the typical home buyer in 2015?
For first-time buyers sitting on the fence makes absolutely no sense. Rents are literally off the map while home prices are heading up. If you are on the fence as a first-time buyer you really need to ask yourself why. What are you waiting for? The next crash? How many years are you going to wait while paying sky-high rent? Yes, you missed the bottom of the market. But if history has anything to say about it, thas a long way to run. Waiting a decade for another crash which may or may not happen is not productive nor practical for the vast majority of buyers.
For people selling and buying the issue can be more complicated because different markets are rising at different rates. This is a big point of confusion for buyers and sellers alike. This market is very granular in that the rate of increase differs quite markedly from town to town and even neighborhood to neighborhood.
Some factors influencing home appreciation are:
So lets say you are upsizing. Chances are that waiting will not work in your favor since the trend is for a higher end home to rise at a faster rate than an entry level home So waiting for your entry-level home value to “catch up” to the market you want to buy into is probably not going to work.
A possible exception to this situation is if you are looking to buy into a car-dependent suburban area that is not walkable but currently own a condo in a popular and walkable downtown area.
For those who are downsizing, the problem is a bit more tricky. Many empty-nesters are aching to leave their car-dependent suburban single-family homes and all the maintenance that goes with it behind. In Westchester, many have their eye on one of the popular condo or townhouse communities. Most of these are in very popular walkable areas that have seen a recent boost in development.
Many potential downsizers get knocked off their feet with a giant case of “sticker shock” when they realize that the condo they want which is about half the size of what they are selling costs twice as much per square foot.
Unfortunately, this is the result of a permanent shift in public lifestyle preferences and there is not a whole lot that can be done about it. Waiting it out in the hope that your home’s appreciation will catch up your dream condo is a bit unlikely. In fact it is entirely possible that the condo you want will continue to appreciate faster than your home, making the situation more unaffordable the longer you wait.
Bear in mind that these are just general guidelines. But potential buyers need to take a careful look at where they are and where they want to go. Waiting can be a virtue or a vice. But in a sellers market, sitting on the fence generally does more harm than good.
© 2015 – Ruthmarie G. Hicks – https://thewestchesterview.com – All rights reserved.
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