In 2006, the bottom fell out of the real estate market contributing heavily to the downward spiral of the economy. There were many factors that caused the real estate market to fall into an abyss that lasted for 6 years and caused millions of families heartache. Many point to “income-stated” home loans and the sub-prime mortgage market…. both contributors to the situation, however, hyper-growth of home values was equally responsible. The good news is that, since 2012, we have steadily been crawling out of the depths and have emerged in a new, healthy market. The bad news is that we are getting ready to do it all over again to a lesser extent.
Since 2012 when the flood of foreclosures came to a screeching halt, our values in North Texas (as well as most of the Country) have skyrocketed. This can largely be blamed on lack of available inventory for buyer to purchase… Simple supply and demand. We found ourselves in a real estate “pickle”. Most of the foreclosures had been snapped up by investors and hedge funds, builders were still reeling and not building, and individual sellers who were upside down were trying to get “right side up”. Denton County real estate appreciated some 10-12% each year between 2012 and 2014. The graphic attached suggests we’re on pace for 16% appreciation since last year at this time. Our market is now at or near being over valued. Under healthy conditions in the past, our market appreciates at approximately 4% per year. At the current rate of appreciation, people who purchase in these conditions will likely not be able to break even for years!
We often times sit in meetings with our Client’s who are considering selling their homes knowing that we are at or near the top of the market and they could really cash in. However, Their concern is valid…. “If we sell our home, where will we live since there’s nothing out there to buy”. Our reply doesn’t make anyone feel good or get them excited but from a monetary standpoint makes perfect since. Let’s suppose you secured a home to rent and put your current home on the market? The look you have on your face right now is the same look they have but let’s look at it further.
- Option A -If you stay in your current home and wait to sell until there is plenty of inventory for you to choose from, that whole supply and demand thing has probably already knocked your current value down. On top of that, you will have exponentially more competition as a seller.
- Option B – You decide not to sell and just ride the market. This is a solid option but if you’re motivation is getting the most our of your home as possible, not the best option.
- Option C – Bite the bullet! Â Rent a home/condo/apartment. You put your current home on the market with a Realtor who knows how to list homes in the current conditions as to maximize your ROI. There is a bit of a science to this so choosing a Realtor who really knows there stuff is critical. You will remain in the rental until the market flattens out and starts to come back down. Once it does, you’ve got a bunch of inventory to choose from, prices are more realistic, and you’ve made out like a bandit on the home you sold!
Again, Option C is scary but makes sense if the numbers all align and your current circumstance would allow for such a bold play. My Wife and I are actually considering this option now for our own home.
This is just a little nugget of wisdom from a couple of seasoned Realtors and it is our opinion. We would be happy to talk about your circumstance with you to see watch strategy would be best for you.
Jay and Carissa Acker