The short answer is no.
I know what you’re thinking; everyone {who’s not a realtor or involved in real estate at all} says that right now is not the best time to buy a house, that right now houses are overpriced and the market is going to crash soon, etc., etc. …
Let me tell you why.
“If you build it, they will come” that’s the notion that most home developers adopted prior to the 2007 housing market crash – that’s exactly what led to the crash. The overproduction and surplus of housing inventory is what led to the housing crash of 2007 and while some of us saw it coming and bought during that crisis, many lost the single largest investment of their lifetime. The overproduction of houses and the eagerness of most banks and lenders to get paid on these homes is what led to the crisis. That isn’t what’s happening now.
And… no it’s not because of the shortage of supplies like lumber either, yes, that plays a role but only on a microscale.
Record Low Inventory
The current housing cycle is much different than cycles prior. Fundamentally different. Banks are more responsible with their processes now as well. Prior to the housing and market crash we had still over 2 million houses available left to sell. Over the years, production has rationalized itself better and by 2020 we had a shortage of about 4.8 million to meet readily available buyers.
With little available housing supply, markets like El Paso Texas or the rest of our country have seen prices accelerate their climb up. Inflation plays a role. All-cash sales surged to about 25% of the existing home sales in April 2021, up from about 18% in January. Repeat buyers are becoming more competitive with their offers and yes, more often than not, they push first-time homebuyers out of the way.
Number of homes built in the United States between 1900 and 2019 (in millions)
Homebuilding activity in 2021 will be slightly above historical norms. But it will take at least a few years to correct the massive shortage. In the meantime, we expect the national median home price to rise 9% this year and another 3% in 2022. Hyperspeed homebuying should taper off by year’s end as supply improves and affordability challenges persist. For now, the market isn’t expected to correct and just like anything else, the longer you wait the more opportunity loss you suffer. The key is to getting a good Realtor partner to help you. I believe I can help and I focus on always doing more for the next person. Maybe, that’s you!
When I hear people say that houses are overpriced right now, I can’t help but feel bad and flustered that some out there are spreading those rumors in ways people are believing them. We all know of inflation, unfortunately, that plays a role in the prices we are seeing today, but besides waiting for a future year to come when prices drop, if they do at all, the other best alternative by far is to buy now. Houses aren’t overpriced, there is a higher demand than there is supply and that will eventually adjust but that adjustment doesn’t mean houses will drop in price. At least not immediately if at all. If you’re an investor, you can buy now, refinance later and take advantage of a lower-priced home later when/if house prices drop and meanwhile you have been making money and earning equity that otherwise you wouldn’t have.
I hope you enjoyed reading this. Give me a call ( 915-910-0908 ) if you would like to chat, bounce some ideas or want me to help you negotiate a good deal on the sale or purchase of your next property.
