Enduring the past topsy-turvy impact of COVID and dire health concerns of the past two years, the real estate market has ironically been fierce, with prices booming. Coupled with low interest rates for the past three years, the level of interest in purchasing property has soared. It’s been both difficult and enlightening for buyers, sellers and investors, depending on which side you are on. Long lines at Sunday open houses with multi-offers on the table have immediately created the panic of “now or never.” Buyers have succumbed to sellers’ demands, such as waiving both the inspection and appraisal, to be approved as the “lucky” chosen buyer. This can only happen since the housing climate allowed for a strong sellers’ market with low inventory and high interest to purchase.
An interesting phenomenon has occurred in the market that I call “ghost buyers.” It all started during the COVID period when sellers were not allowing entry due to the virus but accepting offers on paper. In addition, these blind ghost buyers occur more frequently in investment-type properties such as multi-families. For example, a two-family might go on the market for sale with notices that showings are not being granted. In plain English, the owners have refused to allow buyers to see the home in advance due to various constraints such as occupying uncooperative renters or ill owners with a caveat of access only after the buyer’s offer is accepted.
Now, that sounds confusing! How does one put in an offer if they don’t see the interior other than maybe a video? It has been happening more and more that offers come in with no showings since the market now seems to allow for it. Purchasers are then usually assured that even though they cannot enter beforehand, they should put in a solid qualified-value offer and, if accepted, it will be contingent upon seeing the interior during the initial attorney-review period once the buyer is chosen. If you have ever heard of the cart before the horse, well here is a prime example. Typically, it is an anomaly for a buyer to even have interest to proceed without seeing the home, yet during these competitive-frenzy times, surprises are always lurking.
When making an appointment and told no showings, the ghost buyer, along with other potential ghost prospects, will have to make a prudent decision about if they like the home with the black-and-white facts available, including tax report, square footage of the lot and of the home, location and price and maybe even a video to move forward with a decision to put in an offer with the agreed contingency to see the interior only once the offer is approved. Is it risky? Of course it is, and it is actually risky for sellers and buyers alike. A buyer can immediately renege without any legal obligation during the attorney-review window, so the seller loses out on his time to procure the better, right buyer for the deal to happen. Similarly, a buyer can be disappointed with the interior, meaning their focus and energy were a waste of time and effort. However, is it more risky than other deals? Maybe or maybe not. There are always risks in adhering to atypical conditions of sale, but the decision is left up to the buyer if the agreed loophole is acceptable from the get-go. During the sellers’ market, demands are adhered to more often, reluctantly or not, due to the rule of supply and demand.
So, where are we going with this? Blind offers, blind viewings, long wait lines at open houses, competitive offers, over-asking bids beyond the appraisal value, days on market fleeting and short lived are all enablers for the “nature of the beast.” Where are we heading now? With inflation looming, supply chains waning, prices on consumer items growing, gas over $5 a gallon, a dearth of baby formula and interest rates climbing, what is the prognosis? Let’s look at the statistics.
The monthly snapshot indicates a one-year change in closed sales down by 14.7% along with a decrease of one-year change in homes for sale for all properties down 34.1%. With low inventory, creating the competitive market, the median sales price of all properties has escalated by a hefty 8.5%. Nationally, overall existing home sales only recently dropped to a six-month low as buyers struggled to find a home amid rising prices and low inventory. Pending sales are also reported to be down. Higher construction costs along with supply prices and availability hamper new-home sales as well as impact the home-construction industry at this time.
The breakdown of numbers indicates that single-family closed sales were down along with townhouse-condos in contrast to adult communities, which were up 5.6%. All median sales prices increased across the board whereby single-family median sales prices increased 11.7% to $575000, townhouse-condo median sales prices increased 10.2% to $389,999, while adult communities median sales price increased 3.8% to $375,000.
Overall, consumers are feeling the bite of inflation and surging interest rates which recently hit 4.6% in March, rising 1.4% since January and the highest rate in more than three years. Since rates are higher, the same mortgage amount costs more and monthly payments increase compared to the last years. As housing affordability declines, an increasing number of potential home buyers resort to the rental market. However, rental prices have also skyrocketed and vacancy rates are at record low numbers. So, as you get the picture, real estate on many levels is challenging. Time will tell, and right now the fear and concerns of the future are hovering.
Always stay tuned, but more importantly, the holiday of Shavuot is just around the corner celebrating the giving of our Torah and the coming of spring with all its beautiful flowers and weather to enjoy! Now, isn’t that what life for us is all about?
Regarding real estate, cycles of markets will endure on many levels since “home is where the heart is.” Housing is not a stock or commodity to follow, it is where your very journey of life exists. Take the plunge when you are ready and when it is the right time for you! You’ll be glad you did.
And, as always, consult your mortgage broker, who is the catalyst to make it happen financially, along with the services of an experienced realtor to expedite the transaction satisfactorily.
Happy Shavuot to all.
Ruby Kaplan is a realtor licensed in both New Jersey and New York. Visit www.rubybobbyhomes.com for more information. The Ruby and Bobby Kaplan team/United RE/ will promote your home with the best of social media and create alerts for your criteria of housing needs. Your housing needs are our priority! Ruby can be reached at 201-314-4152, on her cell at 917-576-4177 or at [email protected].
