low housing inventory Archives

What’s Best, Rent VS Buy in 2021

A Realtors Perspective

What’s going on in this crazy housing market? Prices are rising so fast many buyers are getting priced out or simply giving up. But that begs the question is it any less expensive to rent? Which is better, rent vs buy in 2021.

Many will argue there’s a great big bubble building in the housing market, and although for different reasons, it sure feels reminiscent of 2008/2009 when it all came crashing down. Prices were rising so fast back then that investors were buying homes and turning around and selling them immediately for massive profits.

While the 2008/2009 housing bubble was bad, this time around it’s a little different.

2008/2009 financial Crisis

The 2008/2009 financial crisis was caused by lax regulatory oversight and some shady banking loan practices. I won’t go into detail here but with everything going on back then it wasn’t sustainable. There was a true housing bubble and it popped in a big way flooding the market with foreclosures and short sales.

For a time after the financial crisis of 2008/2009 it was actually cheaper to buy a house than it was to rent. It took until 2016 for the market to recover just to where it was before the crash. Before that and for awhile after 2016 it was a better financial decision to rent vs buy where you live.

Rent Vs Buy After 2008/2009 Recession

When I first got into real estate in 2009 a great way to get business was to convince people that it was cheaper to buy a house then it was to rent. It was true. At that time rent vs buy favored buying.

I would send postcards to apartment complexes and put notices on bulletin boards with pull off phone number tabs. People would call me to find out more giving me a chance to show them how they could buy a house and pay less in mortgage than they were paying in rent. And it was working. A lot of homeowners were created that way.

That was a great strategy that worked for years all the way up to 2017 and even somewhat into 2018. It started to get a little rougher into 2018. You could still find good deals occasionally, but it was getting more difficult.

Supply vs Demand

The party is now over. 2019 saw some significant increases in housing prices and then, of course, in 2020 and into 2021 prices exploded exploded even higher.

According to Black Knight, which is a company that collects housing data, this is the 18^th consecutive month of home prices rising. They have increased 14.8 percent year over year. That’s the highest that housing prices have risen since Black Knight started keeping track in the in the mid 1990s. That means housing prices are rising even faster than leading up to the last recession.

If we all would have known this a year ago, we would have sunk all the money we had into real estate and sold it all today. We’d be rich!

Todays “housing bubble” is a little different. It’s happening because of a supply issue. There are not enough homes for sale to accommodate all the people that want to buy. The economic term is supply and demand. When there is not enough supply prices go up. More people competing for less product makes the product more valuable and able to be sold at a higher price.

The supply problem in the housing market is making it really difficult for buyers. Just about every house that comes on the market has multiple offers driving up prices. People are paying thousands of dollars over asking for a house and in many cases agreeing to pay over the appraised value.

This isn’t a bubble to pop. The only thing that will cool this overheated real estate market is more supply, or less demand. More homes for sale are desperately needed. While you can find any answer you want to hear by searching the internet many professional analysts see more increases in the near future, albeit not as steep. As long as consumers are willing to pay these prices they will continue to rise. At least until there are enough houses for everyone that wants one.

Rent Vs Buy

The average mortgage payment in America right now is $1487. The average rent in America is $1177.

The most expensive places to have a mortgage are Hawaii, California and New York, with an average of $1684. The cheapest places to have a mortgage are Iowa, Indiana and Arkansas, with an average mortgage payment of $978. With rent, the highest rent is in Hawaii, which didn’t surprise anybody at $1607 on average. The cheapest is West Virginia where you rent on average for $725.

So you can see that, everything else notwithstanding, it’s “cheaper” to rent.

Taking into consideration the benefits of owning a house like equity and getting to do what you want to it and the benefits of renting, like not having to take care of repairs and not having to worry about selling it may make a difference in the decision of rent vs buy.

Cashing Out For Equity

Is it a good time to cash out on your equity?

If you’ve been thinking about selling your house, now might be a good time to sell it to cash in on the equity that you’ve been building. Maybe you can rent for awhile until whatever is going to happen to this market happens. Something has to give. According to Black Knight, the current levels of home growth aren’t sustainable for an extended period of time.

So we’ve either got to stabilize this market or as a lot of youtubers have been predicting for the last five or six years, there’s going to be a market crash. They predicted a housing crash in 2017, 2018, 2019, 2020 and, of course, 2021, which still may happen but don’t hold your breath. Someday they’ll be right.

If you do decide to sell think it through and make sure you have plan. If you’re planning on selling and buying you could be spinning your wheels. It’s a great time to be a seller but not so much a buyer.

Rents are on the rise also. Be sure and research what the rents are in the area you would want to live.

To answer the rent vs buy question, overall right now, comparing dollar to dollar and monthly cash-flow it’s cheaper to rent.

Sell Your House Yourself

It’s always a good financial decision to sell your house yourself and save on those outrageous real estate commissions.

Why Low Housing Inventory Means More Money

by Joel Weihe

Why low housing inventory means more money for you, the For Sale By Owner.

My day job is helping people with their real estate needs. That entails answering questions, consulting, helping folks find homes to buy and listing homes for people that want to sell.

I also teach Ordinary People how to sell their homes themselves without having to hire a listing agent.

By ordinary people, I mean not real estate agents.

Why would I want to show someone how to do my job themselves, without me? It’s because I can see the future. Every year more and more home sellers are deciding to go it alone, to sell their homes themselves. It would be a much larger number if people knew how to do it, how easy it can be. If they weren’t nervous about it.

The number of For Sale By Owners is growing regardless.

It’s very profitable.

When I ask clients if they ever thought about selling their homes themselves the answers I get are I don’t know how or they think there’s a lot more to it than there is. Sometimes they don’t want to “deal” with it. Those are the homes I sell, and charge a lot to do so.

Not only do I teach strategies and tips for helping you to sell your house yourself, but occasionally I like to bring you information about market conditions.

Why Market Conditions Are Important

Market conditions are important to know because they dictate price and sell time, how long you can expect your house to be on the market before it sells. Price and sell time are the two biggest concerns for a home seller.

Knowing this information about the state of the real estate markets lets you know how long is too long for a house to be on the market for sale. This is very important information. That’s how you determine if your price is right or if it’s too high. If the house is sitting on the market for too long then it’s priced too high.

That’s important because time on the market can really affect price. The longer it sits the less it gets, but time on market is relative to market conditions.

For example:

Buyers Market

In a strong buyer’s market, meaning there is an oversupply of homes for sale, I expect a house to sit longer. If homes similar to yours are taking 3 months to sell, then you should expect yours to take around three months to sell.

Give it 3 months and if your home hasn’t sold you have to start thinking about a price reduction. If it sits too long, potential buyers will wonder what’s wrong with the house. When they do view it, they will look for problems to explain why it hasn’t sold.

That’s what I do for my buyer clients. When we look at a house that’s not selling I have to wonder why. Most of the time it’s simply because a house is overpriced but buyers don’t always understand price.

Sellers Market

Adversely in a seller’s market when there is not enough supply of homes to satisfy buyer demand then homes will sell fast and for more money. Simple supply and demand metrics. Not enough Supply to meet demand means higher prices.

Supply shortages cause bidding wars. When there is over one buyer making an offer on your home, that’s referred to as a bidding war. Bidding wars are good for sellers because it drives the price up. Buyers are competing against each other.

That’s why low housing inventory means more money. More people competing against fewer homes.

Market Conditions Summer of 2020

So finally let’s talk about this market. Right now, the summer of 2020, the country is in a very robust real estate market. It’s a seller’s market for sure. More so than your average seller’s market. There are some historical things happening in the real estate market right now despite the covid-19 recession, and because of it.

Let me explain.

This pandemic and the massive unemployment across the country caused by it has somehow not really affected real estate much. Most past recessions in the United States have caused home prices to drop, sometimes plummeting to historical lows. Not so with the covid-19 recession.

In fact prices are rising at a rapid pace. That’s a direct result of low housing inventory and why it makes you money.

According to Attom Data Solutions home prices nationwide rose 6’2% in 2019. The first half of 2020 has seen an even more drastic increase. First quarter data provided by the National Association of Realtors shows real estate prices rose 7.7% more over the same time in 2019. The second quarter shows no sign of slowing down.

Back in December of 2019 Zillow was writing articles about low housing inventory and it’s only gotten worse since.

Not Enough Supply

The very limited housing Supply across the country has been driving prices up at an alarming rate. Good for you if you’re selling your house yourself, not so much if you’re buying a house.

“Supply is extremely limited and there are simply not as many homes for sale to meet the demand among potential buyers” says Lawerence Yun, NAR’s chief economist.

Short supply and increased demand means higher prices. It’s economics 101.

To Much Demand

And that brings us to the demand side. It seems to me, in Kansas anyway, there are more buyers looking for a home this year then in previous memory. I hear the same thing from my colleagues around the country. It could be that there is a backlog of buyers building up because they can’t find homes to buy.

Another factor driving buyers out in droves is the massive rate cuts by the Federal Reserve. Mortgage interest rates are at historic lows, dipping below even the low rates during and shortly after the great financial recession of 2008-2009. last week I put a buyer client in contract on a 30 year fixed FHA loan at a 2.75% interest rate. 2.75%. Crazy.

Low Housing Inventory Causes Rising Home Prices

I’ve been helping people with real estate in Kansas for 11 years. I’ve seen nothing like this. Low Supply and high demand means more money for you as a for sale by owner. There literally has never been a better time to be a home seller.

Sometimes when real estate prices start Rising dramatically for no good reason appraisers will hold them back. That’s part of their job, but even the appraisers are justifying this current rapid rise in real estate prices because of the supply shortage.

This was exemplified on one of my recent appraisals. The appraiser noted:

“There is a shortage of homes for sale. This in turn has caused fewer sales. As the sales indicate, there is a range in value. This is not considered unusual due to the limited number of homes for sale. A market condition adjustment was made to the sales. Recent data does not indicate an impact on values due to COVID 19. The market condition adjustment was based upon the most recent Federal Housing Finance Agency (FHFA) figures for the area.”

This Low Inventory Won’t Last Forever

This won’t last forever. It’s still to be seen how the Covid 19 recession will shake out. If the economy falters home prices will drop. As long as the Government is providing stimulus economists predict the economy will remain stable but more stimulus means more debt. It remains to be seen how much debt the country can stomach.

The short term good news is that low housing inventory means more money for you.

In conclusion, is it a good time to sell a house? That is a big fat yes. It’s a great time to be selling a house. Residential real estate prices are on the rise all across the country. Homes that are Priced right and properly prepared for market are selling at crazy high prices and they’re selling fast. Many times they’re selling with multiple offers in a day or two.

Is it a good time to buy a house? Not so much. With real estate prices on the rise you’re paying quite a bit more than you would have paid last year, six months ago or even last month in many cases.

If you are selling your house because you want to downsize, upsize or for whatever reason you’re buying it could get a little tricky. If you’re selling your house yourself and moving into a van, well, count your money.

Thank You

Thanks for reading and if you have questions ask Below in the comments. You can also take a look at my website, https://infinhomeservices.com/, for information, tips and strategies to help you sell your house yourself.

There’s also a member’s section, https://infinhomeservices.com/diy-real-estate-3/, with a step-by-step detailed guide to teach you everything you need to know to sell your house yourself fast and have a smooth transaction. It’s the same thing I teach new agents when they’re first time learning how to sell homes.

If you need state-specific real estate forms and disclosures there’s a link for that too.

Why It’s Easy To Sell A House

by Joel Weihe

House with a For sale By owner sign in the front yard — Sell your house yourself

I will tell you why it’s easy to sell a house in this real estate market. In a nutshell, it’s because there are not enough homes for sale to satisfy buyer demand. There are a lot more buyers than there are homes for sale, therefore buyers are battling over homes for.

How it Works To Sell A House

For example.

I listed a house last week, and it sold in 4 hours. The amazing part is I sold that house exactly one year and 4 months ago for $175,000 to this guy. We listed it for $190,000 and got an offer, a full price offer, in the first 4 hours. The guy made $14,000 in a year, minus the $10,800 he paid me and the other real estate agent to act as middlemen for him.

What does that tell you about this real estate market?

One thing it tells you is he could have easily sold that house himself and kept that $10,800. It’s easy to sell a house yourself.

Houses are getting listed on the internet sites like Zillow and Trulia and that’s where consumers are looking.

Consumers are finding those houses on their own. Then they call their realtor and asking to see it.

Step by Step

In this section I will lay it out for you step-by-step.

When you sell a house, the first reaction is to call a real estate agent. The agent comes and meets with you for 45 minutes. They fill out some paperwork and list your house on the multiple listing service for $320,000. The Multiple Listing Servise, or MLS, is the proprietary service where Realtors list homes for sale.

The MLS then distributes that listing to all the different internet real estate sites like Zillow, Trulia, Realtor.com and dozens of others.

There’s someone out there that has decided they want to buy a home. They open up the internet, search Zillow and see the house that your real estate agent listed, yours. They call their real estate agent who writes an offer for them and sends that offer to your agent.

Your agent calls and tells you about it. You either accept it or send a counter offer. Eventually you come to an agreement with the buyer. You both sign a contract. 30 days later you go to closing and the real estate agents collects $19,200.

Wow, $19,200 that you could have had to spend, or save. Think about what you could do with $19,200.

This Market is Different

A seller can sell their home themselves in any market it doesn’t matter if it’s a seller’s market or buyer’s market.

What’s particular about this current real estate market and why it’s easy to sell a house? I’ll tell you that this is the most active, fast-moving Market I’ve seen in my 11-year career. In fact, before I became a realtor I was a project manager for residential builders for 20-plus years. So in all my 30-plus Years Around real estate I have never seen a market like this. For instance even the great housing bubble of the early 2000s was not this crazy.

All around the United States, the housing market is super low on inventory. Simple supply and demand metrics are driving prices up making homes sell fast. As a result people are putting their houses on the market and if they’re priced right and presentable they’re selling in one, two or maybe three days.

Realtors are making thousands and thousands of dollars to sell a house that sells itself. Home sellers could easily keep that money.

I’m not complaining, I’m one of them, I’m a real estate agent, and the money is good. I like it. But it’s unnecessary for you to be spending that money.

Sell your house yourself. Keep your money. Put it to better use.