Faced with a major shortage of homes for sale, Georgia buyers are faced with extended weeks of looking, quickly rising prices, rising interest rates and stiff competition from other buyers when an acceptable "for sale" home is found.
Here to give hope to home buyers everywhere is our own FOX 5 real estate expert, John Adams.
Q: John, we keep hearing stories of houses putting up a "for sale" sign, and getting 20 to 30 offers over the first weekend. Is this for real? And why?
A: Yes, it is for real. And the crisis is most severe in the range of starter homes for first-time buyers.
1. We are experiencing a severe shortage of inventory. There are a variety of reasons. But this is currently a strong seller's market, and that is unlikely to change in the near future.
2. Sellers are reluctant to have strangers in their homes for obvious reasons, and most owners who offer to sell are not highly motivated to sell. Lots of sellers are sitting back and watching values increase almost one percent per month.
3. Buyers are frantic to lock in a mortgage rate. Even though the Fed has indicated that home loan rates are likely to remain low for the next 12-18 months, the fear is that home loan rates will jump in the near future as a way to slow an overheated economy.
4. Builders are worried about the economy and getting in a financial squeeze. FDIC and Federal Reserve regulators are discouraging banks from making construction loans to builders, and builders who can’t borrow can’t build new homes.
Q: So who is driving this bidding frenzy?
1. Millennials who have been hoarding cash & holding back. The pandemic has, in fact, been a financially beneficial time for many who have worked from home, grew their savings, and decided to take part in the American Dream.
2. The oldest millennial is now 40, reaching peak earning age. This is the largest block of buyers ever to enter the market, exceeding the baby-boomers of the earlier generations.
Q: How can a wanna-be buyer cope with this situation?
1. Make an offer with no inspection contingency. The seller interprets your wish to inspect the property as a fishing expedition to see if you can force the seller to pay for a bunch of repairs/improvements you might want.
2. Make an offer with no loan contingency. The seller interprets your wish to make the offer contingent on your loan approval as a 50/50 toss-up as to whether or not you might or might not get the loan you need. The seller sees that as YOUR problem, not the seller’s concern.
3. Make your offer all cash. Borrow all the cash you need from a family member, friend or another source to buy the home for cash, then arrange with lender for delayed financing. This can be arranged ahead of your home search so it is essentially a "done deal."
The Bottom Line
The U.S. Federal Reserve Bank, for better or worse, has its foot on the economic accelerator as hard as I’ve ever seen. This nation is rapidly emerging from a huge financial crisis, but we may be headed for inflation and higher interest rates. Anyone who buys now and locks in low financing will be very glad they did.
Facebook Live Chat
John Adams will be here for the next hour to answer all your real estate questions on our FOX 5 Atlanta Facebook Page. He is happy to field all real estate questions, not just those related to today’s topic.
Atlanta native John Adams has been a real estate broker and investor in residential real estate for the past four decades and has seen the market go up and the market come down. He hosts "The Real Estate Coffee Break" every Saturday at 11 a.m. on the world wide web at www.RealEstateCoffeeBreak.com, where you will find free special reports on buying a home and selling a home. John believes that, for most Americans, the best investment they will ever make is their own home.
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