Is Now A Good Time To Be Both A Home Buyer and Home Seller?

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I have been contemplating a very interesting concept relative to the current conditons in residential Real Estate … can it be a good time to be a Home Buyer and a Home Seller at the same time? Some might say that a Home Buyer needs to get a great deal on a home in order for it to be a good time to buy.  The same thought process would suggest that a Seller would have to sell at or near a peak price in order to be a good time to sell.

In my opinion, the Real Estate bubble of 2008 has created a world where perceptions and realities can affect a potential Buyer or a Seller from taking the appropriate action that is right for them. For example, any of us homeowners who looked at Zillow or any home valuation tool in 2005 to early 2008 probably have an amount in our minds that seems unrealistic in 2016. Due to the bubble and the artificial price inflation we experienced, those values were meaningless, unless you were selling at the time … and if you were lucky enough to sell at that time, chances are you bought something else that was “overpriced.”

Then, there are the potential Buyers who are sitting on the sidelines with the belief that we are headed for another bubble as prices are projected to increase 5 to 6% this year. This quote by Lawrence Yun, Chief Economist for the National Association of Realtors sums it up well:

“Even though the credit conditions appear to be easing somewhat, the move is from overly stringent conditions to not-so-overly-stringent conditions. It is a far-fetched view to imply the current mortgage approval process in any way resembles the loosey-goosey, easy subprime mortgage access conditions of a decade ago.”

In other words, prices are increasing because demand is in excess of supply, not because of artificial factors as in the early to mid 2000’s.

So, to my argument that now is a time that is good to be a Home Buyer and a Home Seller, here are my key points:

Interest Rates are historically low and chances are they are not going to stay this low. Being able to secure an interest rate under 4% creates buying power for Buyers enabling them to purchase a more expensive home and/or buy any home, for that matter. Clearly a benefit to Home Buyers! Well, if you are selling your home, you certainly want to have as large a pool of buyers as possible. If interest rates increase to 5%+ in 2017 as Freddie Mac projects, buying power will decrease and that will affect both Home Buyers and Sellers!

Potential Sellers’ understanding of their home’s value and equity in their home need to be revisited. According to Corelogic, 91.5% of homeowners have positive equity in their homes and 72.6% have significant equity in their home. Significant equity is considered 20% or greater. This is a big deal! By understanding the value of your home and understanding your equity position can enable you to move on with your life … downsize, move to a warmer climate, move closer to your kids and grand kids, etc. So many people have delayed their move as they were “under water” on their mortgage. That brings me back to a point I made earlier, as I have heard people say that they are going to wait until the market continues to improve back to pre-bubble levels to increase their return on investment.   Who knows if that will happen AND do your really want to continue to delay the next chapter in your life?!

The reason this is so important is because we are experiencing such a shortage of inventory for sale.  For example in Buffalo Grove, there is only a 2 months supply of single family homes for sale. The only real downside for Home Buyers now is that all of the good listings are selling fast and their options are limited. NAR has reported that “foot traffic,” which measures showings is up significantly, indicating that demand is high. The biggest impediment to Home Buyers is simply a lack of inventory!

While I don’t want to be considered a “cheer leader,” I do believe that NOW is a good time to consider that next move and chapter in your life!

Eddie Nusinow

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