- To try to secure a home in the US now requires the buyer to be creative and really get the property owner's attention.
- It's a cutthroat market that is surprising everyone.
- States like Utah, Texas and Arizona have experienced growth of new residents from California.
To say real estate is on fire right now is an understatement. The United States has never experienced real estate transactions at the rate it is experiencing right now. Driven by economic opportunity and historically low interest rates, homeowners are offloading properties at higher revenues than ever seen before and in nearly every state. What was once a $300,000 home can now be sold for $800,000 or more. And where this pricing trend used to happen in heavily populated states like California and Texas, it’s now occurring all over the US.
For this reason, inventory (homes for sale) are at a shortage and are requiring enhanced creativity on the buyer’s part.
Incredible Offers Because of Low Inventory
To try to secure a home in the US now requires the buyer to be creative and really get the property owner’s attention.
It’s now commonplace to see a buyer offer $100,000 in cash to simply secure a property under contract. Where this type of investment was a sizable downpayment in years past, it’s now the standard to even sit at the table or be considered by the homeowner. Likewise, real estate agents are advising their clients to waive certain inspections or any contingencies that may deter the homeowner from selling.
“To even get my clients in the door, I’m telling them to have $100,000 upfront in cash and to comply with whatever the seller wants,” says Oliver Giesser of The Lynne Koy Group, a luxury real estate agency in Sarasota, Florida. He continues, “available homes are so dried up in Florida that we have to be over-prepared to try to convince the seller it is a good deal. Unfortunately, if another offer comes in with more cash or less contingencies, the property is gone.”
It’s a cutthroat market that is surprising everyone. However, agents like Giesser continue to see people move from other states and purchase homes above the market value.
In California, where home prices and the cost of living have been historically high, the state is now seeing an exodus of people leaving the state and buying in states with lower expenses, taxes, cost of living and even insurance.
According to insurance agent Steve Thill of Bend, Oregon, “I’ve never written more policies for people moving from California than I have in the last year. From homeowner policies to transferring their auto policies to Oregon, we’ve seen so many new clients move in from California.”
Likewise, states like Utah, Texas and Arizona have experienced growth of new residents from California too.
The Future of the Real Estate Market
Like all trends, it’s reasonable to assume this current real estate market bubble will burst. Remembering the market conditions from 2008 and the recession that occurred thereafter, it’s recommended for people to be cautious with their investments. Just because interest rates are historically low does not mean they will stay there. Likewise, home prices will likely reduce to a normal range over the course of the next 1-2 years.
In the meantime, if you are a homeowner, you may consider cashing in by selling your property.