Hiatus For the Weekend

I'm taking a hiatus this weekend, I'll be back next week with a new post, in the meantime this is still relevant...

originally posted on February 9th, 2018, by Rod Sager

Bottom Remains Hot!

The entry level of the real estate market here in the Clark County area remains hot with a surplus of buyers bidding on a tight inventory of homes priced below the median. There has been a softening in the buyer pool and that may be due to a combination of higher rates and inflated value pricing people out of the market. However, inventory remains very tight in the bottom half of the market.

The middle and upper price ranges are seeing a serious slowdown in the rate of price growth. I am not seeing negative appreciation, but sellers are reducing their prices that they had up too high as the market has settled in a bit. The rush at the bottom produced a large swath of move-up buyers over the last couple of years, and that helped keep the pressure on at the top in 2015-2016 and part of '17. That wave seems to have subsided a bit and the battle in the upper price ranges has become neutral between sellers and buyers.

Interest rates will be the big story this year. It may be hard to believe for younger buyers that can't remember a time when interest rates were at 6% or more, but historically the average rate in fact hovers in the low 6% range. The treasury yields are a strong indicator for mortgage rates and treasuries are marching higher. This will ultimately result in higher mortgage rates that may reach 6% over the next years or so.

Higher rates tend to dampen the housing market. Our market however is so hot right now that a little cold water might do us some good. Just a little though ;) Buyers that have been sitting on the fence should absolutely get triggered on this interest rate issue. Rates will kill the ability to buy faster than rising prices. A little interest rate heat will also cool the "bubble" and that should help everyone rest easier. Most analysts are predicting much more modest price growth in real estate over the next year or two. This in between period where prices are a bit more stable and rates have yet to get traction to climb could be a great buying opportunity. It is a narrow window and rates will squeeze the buying strength. It's time to get on-board or stay home. The affordable house train is leaving the station.

It's Hot Outside, Sellers Beware!

This toasty warm weather is great for the beach but it can cause problems for sellers with homes that do not feature A/C. Sellers should take great steps to keep their home cool whether they have air conditioning or not. If a home is equipped with A/C by all means be liberal with the cooling when trying to sell the home. Follow all the HVAC guidelines for maximizing efficiency so as to keep the environment clean and your wallet flush.

Those with out A/C... I'm so sorry ;) but there is hope! Keep all south and west facing windows shaded either with your curtains but better yet with blinds. I like horizontal blinds as they can adjust whether light is reflected back out of let in. In the winter I turn the blinds with the sunlight spilling all over, in the summer the blinds are turned at about a 45-55° angle down. This allows a great deal of light to filter in but reflects direct sunlight back away from the interior of the house. This tactic alone will keep your home much cooler and save big bux on your electric bill if you have A/C.

Open windows at night after the temp falls back into the 70s and leave the windows open as late as you can or until the temp climbs above 75° or so. This keeps all that fresh cool night air inside and your A/C unit may not have to come on until late in the day.

Sellers, if you home is unbearably hot the buyers may be turned off and a possible offer may have been lost. Buyers are more sensitive to how cool a house stays int he summer during heat waves and that means sellers have to do their best to keep that home as comfortable as possible.

If you do have air conditioning or a good heat pump system, you don't have try and ice the place over. On the contrary, if it is 95° outside and they walk into a cool 75° it will feel deliciously chill. This will save money and keep your system from overworking itself to death.

It's sizzlin' out there, keep the house cool and get a hotter offer.

More Multiple Offer Scenarios Bode well for Appreciation

I have become very busy these last few months and the market is showing increased aggressive behavior from buyers. This has moved from the bottom which has been hot for over a year, into the middle and upper end of the market. Homes that are "move in ready" and priced right get snatched up quickly and over full price. Just last night I had clients make a generous offer on a home priced at $350,000 which had been listed for just one day. My clients were outbid and the house went pending this morning.

For those folks that are sitting on a home they either bought or refinanced in 2006-2008 this could be the year you pop up above the surface of debt into positive equity. There are few real estate agents that "enjoy" short sales and those may become fewer and fewer as the appreciation generated by all this activity pushes values up.

For buyers, appreciation is a double-edged sword. The rising market gives confidence that they will enjoy a strong equity position over time but the pressure is "on"; as prices rise faster than income, they lose buying power and may have to settle for less home.

I have had a few buyers that didn't pull the trigger last year and now find themselves on the brink of being priced out of the market all together. The moral of the story is that we are moving further into the seller's market and buyers need to jump in now to take advantage of current pricing and these low interest rates. Rates will not remain low once the market shows an ability to sustain growth. Sellers that have been waiting for the market to come to them, need to contact their favorite Realtor® and have their home evaluated. The time may have come to make that move they have had to put off due to the depressed prices of 2010-2012.

I see a confidence in the market that has been lacking since early 2008 and that bodes well for the short term health of the market. Long term will ultimately be driven by interest rates and that is an area where change in the upward direction is inevitable.