Will this be the year you’ll make a conscious decision to sell at the highest prices in our recorded housing history? Will you now consider listing your home to take advantage of this once-in-a-lifetime, perfect storm with the highest demand, lowest inventory and still historically low interest rates and sell at the top of this insane housing market?
Or will you be like so many by waiting and not paying attention to what is going on or just maybe thinking that you are very happy staying in place for whatever reasons that you may have? But maybe you are more of a risk-taker and/or gambler and you are going to push the envelope a little bit further and are going to time the market, by waiting longer until you wake up and “smell the coffee.
What do you think will happen after the supposed additional five quarter-point increases (or could it be more?) in interest rates that our Fed chair and financial wizard, Jerome Powell, said he plans in 2022 when he will be waving his magic wand and begins to put a kibosh on our current wonderful and crazy market?
Inventory will most definitely increase, but not immediately as it will take a year or two or more to materialize, and it will be a matter of time, as this may be the last straw to the wild party of price increases that all homeowners have experienced since 2011 or maybe not. As the inventory increases there will be fewer purchasers, until they continue to save more money and again, like so many others due to the pandemic and before, leave New York state and other locations altogether, due to both excessive real estate taxes and now higher interest rates.
Those rates will cause many who can’t afford the monthly mortgage and taxes and whose budgets cannot support the increased expense to back off and stay where they are or consider renting. However, there will be those who are still trying to enter the market, but will no longer be able to purchase a house, but possibly an HOA, condo or co-op. Increases in the future may be more moderate or stabilize as values will rise only by normal inflation numbers, as they did from 1955-to 1975.
If inflation continues with supply chains being challenged, however, as they are currently, and if not controlled and rectified, then home prices might increase further until demand is drastically reduced while inventory increases to the normal 6-7 month levels. I doubt we will experience anything like the implosion of the market in 2008, where inventory increased to an unsustainable 10-11 months. As we all know many homeowners experienced prices collapsing, leading to foreclosures and short sales, which ruled our market until 2011, when we finally were at the bottom.
Many walked away from their homes as their mortgages were “underwater” whereby they were greater than the value of their properties. All of a sudden it transformed and became a buyer’s market. But then again when will our current 15%-plus inflation (not 7 percent when you include energy and food costs) subside? Will this current situation still continue to cause prices and values to go higher and beyond the reach of so many purchasers who want to buy?
Even more crucial and critical, will builders slow down their construction due to increased material and labor costs but then only cater to the top 5-10 percent of the wealthier buyers? This group will either be paying outright for their purchase or the small minority will be qualified to borrow because of their substantial income, higher credit scores, and low debt/income ratios. Or will the psychology of the market begin to change the mindset of those who could afford to purchase, then decide as they did in 2008 to sit on the sidelines and wait for the inventory to continue to escalate, causing prices to decrease or even crash and then jump back in?
As a side note and suggestion, reducing your home’s clutter becomes the next issue that you have to deal with, if and when you are going to sell. Even if you might not be considering selling right now, it would be prudent to begin to create a list of the possessions and items you will be taking with you and the balance to either give away to people who are currently in need of what you have and/or donate to a 501 3C non-profit enabling you to take a tax deduction.
Talk with your CPA as to what is allowed and not allowed, and make sure you keep receipts and documentation for whatever you donate. Having a tag/garage sale will also be another option (we have an excellent tag/garage sale company that we have recommended for many years). This will relieve you of the hassle of pricing your items correctly and having to deal with wasting your valuable time in performing the tasks of being there on those days that the event takes place.
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has 40+ years of experience in the Real Estate industry and has earned designations as a Graduate of the Realtor Institute (G.R.I.) and also as a Certified International Property Specialist (C.I.P.S). For a “FREE” 15 minute consultation, a value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: [email protected]
