The state of the real estate market in Salt Lake City today is interesting. It’s much tougher to sell a home now and there are three very distinct reasons why;
1. Inventory levels are ridiculously high. Funny how this works (in any market). Prices start to go up, people begin to notice and wait and see, prices continue to go up and people begin to plan selling their homes to take advantage of the rising prices, people begin to list homes for sale and homes sell quickly, market begins to reach critical mass, everyone throws home on the market so they don’t “miss this great opportunity while prices are high”.
Problem is that people begin to think about selling/buying while prices are going up but don’t act. They wait and wait and talk about it while the market is rising and then by the time they decide to do anything the market has begun to slow. Sellers are the last to acknoledge that a seller’s market has turned. It’s truly an amazing thing to witness a seller’s rationalization as to why their home should sell while others are not.
I’m listing a condo next week and the sellers want to list for more than it is worth, and more than it will appraise for and then buy a home for a great price because it’s a buyer’s market. Their rationalization is that homes are in a buyer’s market but condos are still in a seller’s market. This is not the case of course, but this is how sellers think. Another listing I have right now has been on the market for a month and hasn’t sold and today I spent twenty minutes on the phone with the seller hearing why his home should be sold even though not one single house has sold in his city during the last 30 days that are even close to his price range. He still thinks his should should be sold.
2. Lenders have tightened qualifications and taken away many programs. Many deals are failing right now and buyers who were qualified are no longer. Lenders are being very strict- they are looking for reasons to not lend money and the appraisers are following suit- being very conservative with their appraised values. This also causes people to become frustrated and decide to not buy at all, especially for 20% less than could have bought a few months ago.
3. The media declares doom and gloom every day on every channel, all day long. According to the media we should all burn our houses down and live in caves because the fictional “national real estate market” has gone to hell and everyone who owns a home is the devil.
This causes people to sit and wait. Most buyers who want to buy are simply waiting and watching to see what will happen, just like sellers did while the market was going up. Now it’s a buyers market and the best time to buy, so what do buyers do? They sit and wait until the market becomes a seller’s market again- and then they’ll all want to buy and they’ll say it’s still a buyer’s market even when it’s not.
This is the natural order of things. People wait until it’s too late and then demand that things are they way they want them to be. Listen it’s really simple- when lots of people are buying is not the best time to buy. The best time to buy is when not as many people are buying. Supply and demand.
In a buyer’s market buyers need to get a great Realtor and make sure they are buying a solid investment, but they’ll make much more appreciation when the market appreciated rapidly again. If you buy while the market is close to it’s peak you don’t make as much as when you buy while it’s not at it’s peak.
The Salt Lake City market will now remain relatively flat in price appreciation for about 18 months until the cycle comes around again and it begins to grow more rapidly. Question is, will you wait until prices have gone up to buy or will you take advantage of opportunity to buy while you’ll get the best deal?