The summer is winding down, school is back in session, and dotted around town are U-Haul and Budget Rental Vans packed to the gills for those that are college bound. (Okay, my neighbors are actually headed to Burning Man first before their son enters his senior year in upstate New York).
The fall season lies just ahead. Can you feel it? My driveway is covered with shedding pine needles and the air is RIPE with possibility . . .
I think a pro golfer said it best in an interview on NPR last weekend when asked why anyone would choose to play the difficult (and humiliating) sport of golf;"There's always the opportunity for redemption on every hole , he stated, "golf is ALL about the possibilities . . ." and as an aside, he added, "ANYONE can eventually get a hole-in-one." (Okay, that's just salt in the wound.)
I'm not sure my husband would agree, having never achieved that elusive hole-in-one, but with respect to Real Estate,virtually every home offers potential and promise. And as any home-related website will show you, our homes don't just house our possessions, they house our dreams as well (check out Houzz or Pinterest for true inspiration and "follow" me), which is why BILLIONS are spent in the home industries year after year. Thus, it's no surprise that the health of our economy is, in no small, part, directly tied to the robust nature of the housing market as a whole.
And Buyers agree . . .
"Let's just get it done," one Buyer emphatically said. "We're done writing offers."
Now you're talkin' (I couldn't agree more).
Quickly followed by: "But make sure we don't overpay!"
Got it, but "overpaying" may be more difficult to measure. In a quickly escalating marketplace, where homes are selling well, well, WELL (!) above the asking price, purchasing a home in today's world, can be rather daunting, as each new sale raises the ceiling - especially if this is your first foray into the home-buying world. No wonder even well-qualified Buyers can vacillate between stepping up and stepping off. Who can blame them?
Unfortunately, or fortunately (depending on how you slice it) there is a premium to be paid for living the "California lifestyle" - and for good reason. (While we're on the subject of golf, have I mentioned that I visited my son in North Dakota this summer, where he was mowing lawns at the Bully Pulpit Golf Course in Medora five days a week? I'll venture that home values in that area are QUITE a bit less.)
Here's the skinny: you're NOT overpaying, you are paying what the market will bear.
Some of you will choose to wait it out (rather than move to North Dakota) and that's a reasonable course of action. No worries, as long as you understand that rising interest rates directly offset your purchasing power, so waiting for prices to drop AS interest rates rise may actually cost you MORE in the long run. Focus on the cost to own, NOT the price to purchase and you should be fine.
Will the market correct at some point in the future?
Undoubtedly so. If history teaches us anything in the ways of economics, it's that ALL markets are cyclical. However, it also shows us that housing prices continue to trend UP over time. (Just ask your parents what they paid for their first home and how much they stretched to buy it.)
Then remember that buying a home is a long-term proposition. Understanding whether you bought at the top or at the bottom of the market is largely a matter of hindsight, history, and good luck (as is hitting a hole-in-one).
"When can we expect the market to correct?"
AHHH, that's the $64,000 question. (I honestly wish I knew.) The last housing bubble ran for several years before finally adjusting, but irrespective of the historical patterns, we can only ever work in the market in which we are currently in. (Cliff and I have bought at both the height and the bottom of the markets and in the long run, it truthfully, hasn't made much of a difference on our journey.)
If you want and need a home in today's world, it will require a leap of faith, a belief in home ownership, and a good understanding about the current dynamics of the marketplace.
With interest rates still in your favor, and with the Fall Market about to increase the available inventory, buying a home now is often more affordable than renting one. So whether it's a fixer or a turn-key property you desire, a better golf game , or a college journey that lies ahead, it's all about the possibilities . . . Fore!
How can I help you?
Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.