Things change. Home buyers who do not recognize and adjust to the changes are going to have a hard time this year.
From 2007-2010 buyers were in charge. Sellers were so eager that they slashed prices and accepted many contingencies. Buyers could call most of the shots. If one seller wouldn’t make a deal, there was always another property down the street.
Not anymore. A shocking drop in the inventory of unsold homes means that today’s buyers are as disadvantaged as sellers were a few years ago.
I’ve provided you with two charts below that compare March 2013 stats with those from March 2008. First, look at the chart for sales contracts. Notice that sales activity has increased quite a bit.
Now, look at the chart for inventory. This is what today’s buyers need to digest. A larger number of buyers are trying to buy a much smaller number of homes than in 2008.
Today’s buyers must understand that they face the stiffest competition we have seen since 2005. Therefore, buyers must:
1. Be ready to act — When the right home comes along, a successful buyer has to be ready to submit a strong offer quickly. Those who don’t will lose to better-prepared buyers.
2. Be ready to pay — Home prices are rising because of buyer competition. The two are inextricably linked. Don’t expect to pay last year’s price for this year’s listing.
3. Be careful — Despite what I just said in points 1 and 2, be careful. Many bad decisions were made in 2003-2005 because buyers were so eager. Trust your Realtor’s guidance when it comes to home inspections and other contingencies. Don’t overpay for a house you’ll regret owning.
There is some hope for buyers who do not get the home of their choice this spring: Summer and fall will be a little easier.
Buyers face the stiffest competition in March, April, and May every year. After that, things are less hectic. At the same time, this will probably be the most competitive summer that buyers have experienced in eight years.
—Chris Sicks has written about the local real estate market for the past 20 years.