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The state of the market | What you need to know!

The Redux Group

The state of the market | What you need to know!

For most of us, the word home refers to a place to live and feel a sense of belonging. But what if we told you that shifting your mindset could lead to great financial freedom? Would you be interested? What if your home was also your investment? If have ever thought about buying or selling, to build your net worth, you’ve come to the right place.

So, let’s address the elephant in the room. We acknowledge that shifting your perspective can be unsettling, but the antidote to fear is knowledge, so let’s start by taking a look at a few insights into the current market:

In 1980, the average home price was around $80,000. In 2021, that number increased to $400,000 nationwide! That’s a 400% increase! Over this 40 year period, home prices fluctuated drastically. There were times when they spiked and times when they dipped. If you zoom in, those fluctuations were intense. But if you consider these changes from a Birdseye view, the takeaway is clear:

When we focus on long-term trends, we get a more accurate understanding of the value of an investment.

There’s just no denying it. In the long run, Real Estate is a winner! But where should someone looking to invest begin? For starters, know your market, so you can make informed decisions.

Inventory is Scarce!

You’d have to be living under a rock for this to come as a surprise. To give you some perspective, a balanced market occurs when there is a 6 month supply of inventory. Any time there’s less than 6 months of inventory, we have a sellers market, any time there is more than 6 months of inventory, we have a buyers market.
Currently, we have just over a one month inventory. This is an extreme sellers market! So let’s talk about why that matters.

Buyers should assume they are competing against multiple offers.

  • This means that most homes are selling for over asking. A common assumption buyers make is, if they pay over the asking price, they are over paying. This is not true. It’s important to remember that the real estate market is constantly shifting and that houses are being priced to drive competition. Be prepared to pay over asking.
  • Have an open conversation with your agent before setting your search paramaters. You might find it’s best to look at homes slightly under your approval limit. For example, if you were approved for $800,000 you might choose to look at homes in the $740,000 range so that you have the ability to compete in a bidding war.
  • Another thing to consider; in a market like this you’re likely to build equity more rapidly than in a buyers market. This means, all that competition you were up against when purchasing your home, is now working to your advantage in raising its value.

Sellers should be aware that in a hot market, you can’t list your property too low, but you CAN price it too high.

  • Listen, we all want to walk away from an investment opportunity with a healthy profit, but keep this in mind: In this market, a bidding war is the ultimate win! So be sure to price your property in such a way that you are creating lots of interest. The more interest you create, the more offers you are likely to generate. And multiple offers are the best way to drive up your final sale price.

Takeaway

So what do we take away from all of this? Look at your long game and take a deep breath.

  • A 400% return on your investment is a pretty great return
  • Inventory is scarce, so get ready for bidding wars
  • Don’t be over eager when you are pricing your property. Drum up interest and let the bidding wars begin!

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