Don’t Buy Now (May 7 2021)
Don’t buy now.
The moratorium of foreclosures is scheduled to end on June 30. They just overturned the moratorium on evictions.
Real Estate is going to go back to a more "normalized" market. This one where the market goes up and the market goes down.
This one has been going up for 13 years. 15-17% in the last 12 months.
The demand for real estate in Florida, the demand from New York buyers and California buyers and people escaping the cities, protests and pandemic did not add to the demand for real estate. These buyers just replaced the normal buyers that have been outpriced.
If you do not believe it ask your real estate professional for the closed deals by month for the last 3 years. In my county we average 1200-2400 transactions a month for the last 10 years. In February there were 1300 transactions, in March there were 1600 transactions, in April there were 1700 transactions. Where is this extra demand that has people bidding against each other over appraised values?
Demand is not the problem. Supply is the problem. In my county we have had around 2000-3000 homes to choose from on a regular basis. (to be specific, we have had around 3500-4500 homes with 1500 of them under contract leaving 2000-3000 homes to choose from. Now we have 3000 homes with 2300 under contract leaving 700 homes to choose from.
The problem is not demand; the problem is supply.
Who knew that one of the side effects of the pandemic was that people would “hunker down” in their homes? They are not selling, they do not want to move, they do not want movers in their home, they do not want buyers in their home. They are waiting for a vaccinated world.
We have had a terrible challenge for those effected job wise for around 12 million people. Fortunately for them they may be getting more money in unemployment than they were getting to work. If they are not paying rent or their mortgage, they may be in the best financial position in their lives. No housing expenses and huge cash flow.
There is a dam that is going to break, and supply is going to come. Foreclosures, landlord deals, pre foreclosures, short sales, and regular sellers that are no longer afraid to interact with the world.
And this will affect demand. Buyers that might have competed for the limited number of available homes will realize if they wait, they will have more choices. If they have more choices, maybe the prices will be better if they wait. So, what if you are paying $2000 a month for rent, when you might save $50,000 on the purchase price of a home? Or $100,000.
Let us be clear. The supply of available homes is not going to change because of foreclosures, at least not at first. It is going to take 6-8-12 months for those homes to come to market.
What is going to happen is the media is going to start to report the number of initial foreclosure filings. 100 foreclosures filed. 1000 foreclosures filed. 10,000 foreclosures filed. When regular sellers see these foreclosure filings, they will front run this supply.
You can imagine the conversations. “Honey, there are a bunch of foreclosures coming. Maybe we should sell before they get here.”
And we will see supply.
We have around 7 weeks before the moratorium ends. We still have crazy demand. If you are thinking that you would like to sell into the current strength, this may be your last chance.
Call me Randy Jenkins to discuss. 727-409-4663
Read my market report at 409home.com/themarket.
No one rings the bell at the top and says sell. It is always clear in hindsight.