Real Estate

How long does it take for the market to drop or level out usually? We sold in 24 hrs way over asking and now can’t find a house because I can’t justify spending what people are asking plus the multiple bidding wars.

We are renting right now and I can’t believe what people are asking for in the area.

Re: Real Estate

It’s hard to say because it is so region specific.

New tax laws hurt our prices (Westchester). Sales dropped for a while and then picked up last month and are higher than they were last year. There is a LOT of inventory from lack of sales, and prices have dropped to levels I haven’t seen in 10 years.

Same was not true in NYC (Queens), where prices keep climbing with multiple bids. I hear the high prices Manhattan stuff is going down.

Best time to find a house IMO for price is November, but inventory is low because people take their homes off market for the holidays. But that’s when we found our house. It was out of our original range... but then fell because sellers needed to go.

Houses are hard if you are not an emotionless investor.

Real Estate

It's hard to predict the housing market. It depends on inventory, what type of house you're looking for, what interest rates are doing, etc. Right now, inventory is low on more moderate sized homes, so prices are high. Our area has had homes that I'd never expect to sell for more than $400k, going for over $500k, but there is just very little in the $400k-$500k range to choose from (and nothing in the under $400k range). The more expensive homes in the $600k+ range sit there because there aren't as many buyers in that range. However, the over $600k sellers don't seem overly motivated, because I don't see big price drops either. They seem happy to wait for the right buyer. It's hard to say when or if this will change.

Real Estate

I think the market will eventually level out, but I don't think there is going to be much of a drastic change in inventory or prices. If anything... prices are going to continue to go up and inventory is going to remain low. I've been in my house for almost 4 years and it took me 2 years to find it. So now, I'm going back 6 years, multiple bids over asking price, etc... And the market still hasn't changed, so I wouldn't holdout and rent on hopes the market is going to bottom out again.

Re: Real Estate

What areas are you looking in?

Mortgage rates are already up and expecting to continue to climb. In the very sought after towns, I truly doubt prices will fall. Where there's a demand, prices can stay high.

FWIW, we were in your position last year. We wound up having to increase what we wanted to pay for a new house by a lot! It was worth it as we LOVE our house, but we've also wound up spending way more on our house than anticipated. Had we waited, I think we would have still had to spend just as much on a house, but our mortgage rate would probably be higher.

I'd probably just keep looking until you find something you really want and that you can afford. I wouldn't wait for a drop or leveling as you may never see anything substantial.

Re: Real Estate

Re: Real Estate

I agree - there's really no way to predict when prices will fall.

The starting home up to mid level price homes (say $700,000) has been a hot seller's market for awhile. Personally, I think it's leveling off a bit now. August was sort of a transition month, and a lot of agents I've spoken to have seen a bit of a falling off in the activity. There are still quick sales and multiple offers, but maybe not quite as frenetic as it's been in the last year.

The higher end market has been slower for awhile.

Renting does make sense for sellers who don't want to feel the time pressure of finding another house immediately, but I do agree with the advice to keep an eye on interest rates. Markets take awhile to fall to the bottom. We had a peak in 2005-2006 and then it kind of bottomed out in 2010-12, but it wasn't an overnight process.

I think for the average (non-investor) buyer, most people can't and don't make decisions on when to sell and buy based on the market conditions. It's more driven by lifestyle considerations - e.g., I want to buy a house before my child starts school, or I'm retiring and need to downsize, or we've outgrown this space, or I am being transferred for my job.

I get that prices can seem really high and buyers may not want to pay it, but as I always say, if that's what the market is commanding at a point and time, and what other buyers are willing to pay, that's what the house is worth (from an economic standpoint) at that time. Waiting a year or two does not mean prices will be $100K cheaper, but if interest rates go up a point, you can be looking at hundreds more per month.

On a $400K loan, figure about a $230 difference in monthly payment when you compare 4% rate v. 5% rate.

But let's say you buy a $500K house and put 20% down. With a $400,000 mortgage, with rates somewhere between 4-5%, you are looking at roughly $2K a month in principal and interest. If prices drop and you buy a house for $460,000 instead of $500K, and put 20% down, your mortgage is $368,000. Then your principal and interest is $1840.

So you can see how rates going up a point impacts your monthly payment more than saving $40K on the purchase price.

I would say definitely keep looking while you are renting, and if you see something you like, jump on it versus waiting for the market to drop. It's just not an exact science!

Good luck and congrats on selling your house!