I don’t know if you’ve noticed, but the housing market is in total boom status. That got me thinking about our role as listing agents in this boom. Are we any better at selling houses today than we were 20 years ago? Yes. No question. We have the internet listings; we can transfer knowledge within minutes whereas it would have taken months or years to catch on.
If we are better at listing houses, do we account for the boom?
I don’t think that we do. Real estate agents are always caught in the middle between those that make up the market, sellers, lenders, government policy, and the buyers. If the government lowers rates to ridiculous levels, more people are going to think credit is cheap and utilize it. If banks decide they aren’t going to lend anymore, it would definitely put a freeze on the marketplace.
If the market cools, and buyers are hurt, will it be your fault?
Amazingly, the banks managed to get out of being at fault for the last housing boom. Indeed, most pointed to the quality of buyers who wanted a home to begin with. I think the biggest change in the way we did business after the boom is that we all had to be fingerprinted as real estate agents. How that had anything to do with the marketplace, I have no idea.
Is this the top of the market for home sellers?
It seems like it’s impossible to agree on anything anymore. I’ve noticed strange things happening in the marketplace. There are home sellers listing properties for ridiculous amounts, and there are buyers seemingly everywhere. To call a top to a market is a lot easier in hindsight. If I write two articles, one saying the market is on fire, and the other saying you should be concerned about the housing market being on fire, I’ve pretty much made it so that I can’t lose no matter what the market does.
What should I be looking for if I have to buy a house?
I have quite a few buyers right now. The number one thing that I tell them is that they need to buy a house that they will be comfortable in forever. That means more than five years in real estate terms. The reason I say this is that no one really knows what the housing market will do from year to year. I’m convinced many thought that home prices would never appreciate after 2007. If we know that we don’t know what will happen, we can take steps to mitigate any potential disaster. Here’s how
- If you are planning on having a family, it’s best not to move into a 2 bedroom home <1000 square feet. By the time kids do arrive, there’s going to be space issues.
- If you are an empty nester and looking to downsize, it’s still prudent to choose a new home that has features that don’t seem to age. For example, a 3 bedroom home will usually always beat a 2 bedroom home in retaining value. Square footage is not usually the best indicator of value. All things being equal A 1,400 square foot 3 bedroom home is going to retain more value than a 1,400 square foot 2 bedroom home.
- The house you decide to purchase has to be a good house in the first place. What do I mean by a good house? One free of foundation issues, roof issues, finish issues, etc. If you go buy a house that has known water issues, known mold issues, known roof issues in any market, there is a penalty to the value of the home. Structural issues are not the same as cosmetic issues.
- Home affordability matters. If you are buying a home at the top of your budget, that’s cause for concern. What happens if you lose your job? House automatically disappears. However, if you buy a house right, stay in it for years, losing a job might be ok. There might be enough equity in the home to allow you to sell and move to something smaller without bringing any money to the table.
While we as listing agents have gotten better, we aren’t the ones steering this ship. This buyer demand is coming from low interest rates, population growth, and stimulus money. Remember that the buyer is ultimately the best beacon for home prices. Should buyers decide they are unwilling or unable to pay inflated prices for homes, the market will go down, and there’s no amount of sales wizardry that will change it.