Should a Buyer wait?

No!

Besides the loss of buying power and increasing monthly cost of home ownership, our very strong economy with record low unemployment is predicted to prohibit a “collapse” of the housing market. Combine that with the (still slowly) increasing home values due the lack of inventory. Economists say that the next correction is still a few years out. It will be nothing like the ‘great recession’ we just experienced due to sub-prime lending standards and a failing banking system. The housing market will correct itself again  s-l-o-w-l-y  this time, and tip over   s-l-o-w-l-y  as well.

Towards the end of each correction, a stimulus is introduced, usually in form of drastically reduced interest rates, reducing the time of a recession and to expedite a turnaround. Foreseeing a regular and quicker correction, a buyer would have to wait for the market to tip, decline and swing up again since only the rear view mirror will give a buyer the “bottom” of the market. If the reason for a buyer’s purchase is a good school system, their children may have graduated by the time the correction is over. 

The buyer who acts soon will immediately benefit from still slowly rising home values, paying down principal, tax deductions and not to mention from the desired quality life as a home owner.

 

What does that mean for you as a Seller?

List soon and price right!

As that buying power diminishes - starting in the middle of the year, when rates may rise again - buyers get more price sensitive, resulting in lack of urgency and fewer multiple offers. There is no time to “test the market” when listing a house. Statistics in NJ show that a house priced right will achieve its fair market value and more... But the same house priced higher by 3 - 4% will need to drop the asking price at least once, creating more bargaining power for the buyer, which results in lower offers.

While a low inventory will continue to put pressure on prices, rate conscious buyers will slow down the sales pace, making it for sellers more difficult to sell later in the year as interest rates increase and buyers start pulling the brakes.