As the housing boom rages on, the market continues to set new highs.
Buyers often have to pay prices that are not supported by recent sales evidence, in order to outbid the competition.Trading beyond the evidence is always risky and nerve wracking – whether you are selling or buying.
In a falling market, as the market sets new lows, sellers often sell for less than the sales evidence suggested. In a boom, such as the current one, the sale price is often above expectations.The sales evidence to date does not support the final selling price.
In this booming market, buyers find themselves paying more for a home than they would have had to 6 months earlier. However when the market is falling – sellers often sell for less than they could have sold for 6 months earlier.
The same principals apply, just in reverse. Selling for less than you could have or paying more than you anticipated, always involves angst.
In terms of the current market, sellers are well advised to acknowledge that the boom will stop at some stage.
When that will be exactly is anyone’s guess. But it will stop. Pricing above the available sales evidence is like playing musical chairs.
When the music stops and prices pullback, those sellers that have deliberately overpriced will suddenly be drastically overpriced.
Given where we are at in the current cycle, pricing above the market and waiting for it to catch up to your price may not be the smartest move.
This is not to suggest that you have to under sell your home. It’s a case of not being overly confident, at what could be the peak of the market.
A subtle indicator that suggests sellers are looking to sell and lock in prices at current levels is the amount of stock on the market this winter. The stock on the market is up in comparison to the previous two winters.
Many of this year’s winter sellers don’t want to risk waiting for spring, when the deluge of stock predictably hits the market. Geo-political events may also be impacting on seller’s decision to lock in these prices now.
Buyers who are frustrated at current prices need to make a decision – will house prices go higher or will there be price relief at some stage in the near future.
There is much talk in the media about a housing bubble and a crash or a correction coming. Maybe there is, may be there isn’t. The only certainty at present is house prices are extremely strong.
Trying to purchase a home on the basis house prices are going to crash won’t do you any good at present. It will simply lead to frustration as the market ignores the thesis of a bubble.