Should You Buy In This Market?

Certified Mortgage Advisor
NMLS 1701021
March 22, 2019

Where to find a good market

If you're looking at buying a house within maybe the next couple of weeks or a couple of months, you might be wondering, is this a good market to buy a house in? And that is the biggest question that my clients have is a good market and walking through the ups and downs of this market as well.

The market is not great all the time

Now, obviously, as a loan originator, I make money when people buy houses, but I'm so tired of seeing everybody in the real estate industry say, of course, the market's great. It's super hot right now. Come by and buy with me. I make money when people buy it, but I don't think that I could build a lasting business by lying to people about the market.

My honest opinion

So I want to give you an honest opinion of where I think the market's at right now so that you can make a good decision on if you are looking at buying. Are you going to buy now or in a couple of weeks or a couple of months, or is this maybe a longer-term plan for you?

Seller's market

So the market right now, we were moving from a really heavy seller's market, right? So there are two main types of markets. There's a buyer's market and a seller's market. A seller's market is basically where the seller has the advantage, right? The play's all in the seller's hands. And the reason that happens is that inventory is short and inventory just means how many are available on the market.

Big demand but no houses available

So in a seller's market, there are not a lot of houses available and there's a big demand, which means on the seller side. If we're talking about just basic economic principles is all about, it's all about demand.

Sellers have the say

The sellers have the upper hand because they have a lot of buyers. So what's happening in a seller's market, and what we saw happen a ton at the end of 2018 was that a seller could go put a house on the market, and sometimes they would see an offer within two hours of listing, which is crazy. It's great for sellers because they can keep that house on the market for even a week. And then they might be seeing 10, 15, 20, 25 offers from buyers. So the sellers have the control, right? If you're a buyer in a seller's market, you're subject to what is the seller want, and the sellers normally, whatever they're asking for, they're normally going to get the best terms. So that's what we are moving out of.

What market are we in right now?

Right now, we're slowly dipping into more of a neutral market, and the market and economics in general, we always see flows. Like it always goes up and it goes down, it goes up and it goes down and this is the market it goes too heavy, one way, then it corrects itself and it goes too heavy the other way. And it corrects itself. And it's this repeating pattern, right? It's what most of the markets are saying. So that's what we're seeing from a statistical point, we're moving from a seller's market into more neutral territory where we're about to hit into a buyer's market.

Cons of Neutral Market

But the problem is in a neutral market you have, whoever held control the last time that mindset is still there. So what's happening is we're in a neutral market, but sellers still think they have the upper hand. If you're looking at putting in an offer. So you being the buyer, we're coming out of a seller's market.

Homes will be listed longer

So things are more in your favor, but sellers sometimes still have the mindset that they can get anything they want. So what I think we're going to start seeing is a longer average day on market for a house where the homes are sitting as just listed for a longer period of time.

We have those sellers who are, who think they have control of the market. They're holding out for a good bid or a good offer on their house and it's not coming in because the market's more neutral. And I think slowly, we're going to start to see sellers adapting.

Be careful in purchasing

But be mindful that if you are a buyer and looking at purchasing is that we're in neutral territory right now where it very easily can slip into more of a buyer's market here in 2019. But the main problem that we're facing is sellers still think they have the upper hand at least, most of them do. Some of them, if they have a good realtor have better expectations of what they're getting into, but some don't.

Market pricing and how it is moving right now

So as far as market pricing, we're still seeing home values increasing as they have been normally in Montgomery county, we're seeing the appreciation of about 3% per year. Obviously, if you're in different counties that look different. For around this area of Ohio, if you're in Columbus, Cincinnati Dayton area, we're seeing about that 3% growth annually.

So home values are still going up, which is great. But we're not seeing a super sharp decline in the market, and I don't think that we will either. I think that home prices will continue to have a slow increase, but they're definitely going to slow down from the seller's market.

Let's not believe the hype

So hopefully that gives you some good insight into what's going on. I don't want you to believe the hype of every other person in the real estate space who's saying like the market's super hot. Because I don't think that's true. And I don't think that serves anyone super well to get tricked into understanding what the markets like.

Assess what you want and be quick if we need to

Now if you're a buyer who's really picky, it might be difficult to find what you want, which is okay. It's is perfectly fine to start looking and to be patient and to wait for what you want, right? Patience comes to those who wait. But just something to be mindful of, if you're looking for a house and a competitive price range for where you're looking at you might need to be quick to move in on an offer because sellers are still feeling like they have the control but it's not as a rush to the finish line as it was in the tail end of 2018.

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