By: Payam Raouf
Sad but true. “I kill myself if I don’t find a place to live … !”
“I kill myself if I don’t find a place to live because we are going to be on the street!” That’s what an applicant told me over the phone when his applications kept being turned down over a previous eviction. Some applicants are paying in access of $1200 application fees for various rentals.
Almost everyone tells me the reason they have to move is “the owner is selling.” Do you blame them? For sale inventory is going up by leaps and bounds. Since mid August 2021 number of single family homes for sale has gone up by a surplus of about 100 per day.
For almost a year we have been hovering around 4000 SFH for sales at any given time. Now we are over 6000 as of today 9/19/21.
There is no waiting list at new home builders and spec homes are piling up again. A few builders have already started offering bigger incentives to get rid of their existing inventory.
Well, that reminds of me of about the end of 2005 to mid-2006. For those of you who have been around don’t you see similar trends?
To top that off, everywhere I turned my head I see rental apartments being build. Some are almost done, some will be completed in less than 6 months. Well, that’s good news for the buyers and renters and may be bad news for some sellers and landlords.
Well my friend I told him, “Calm down and have faith, fix your credit and wait another 6 to 12 months meanwhile let me see what I can do for you”.
A large number of applicants write down on their application the reason they are moving is, “OWNER IS SELLING”. They also tell me they just need a few more months, they have already applied for these apartments and been accepted but they won’t be able to move in for another two to three months.
The way it is going we should see the inventory for sale increase to 10,000 by the end of this year and around 20,000 by July 2022. Lot of renters has already renewed their leases for another 12 months and even if they were going to buy, they have to wait till their lease is up. I see builders or sellers offering to pay off their lease as an incentive to get them buy their homes. Why not?
Of course, the bigger the supply, the less rents and prices. They eventually come down even if the fed slows or even stops buying these inflated mortgage bonds and keep printing more money.
If you are a buyer you might want to wait a bit longer even if you risk the rate going up even a point. Prices should adjust to it, pretty much same payment but at least you will be able to find the right home, negotiate a better price and posed for higher future gains adjusted to the financial climate. Being upside down locks you in place for a while even if your life circumstances change. That’s a tough position to be. It’s like being in a bad relationship you want out but you cannot.
If you are a renter, renew your lease for a year. Rental inventory will be going up. The writing is on the wall. Just look around. A lot of these cash buyers have to rent them on top of all the condos being build, the higher the inventory the better your chances of finding a more desirable home and a better deal.
If you are considering selling, you should take advantage of these cash buyers unless you have a unique property in a desirable location. It may not be affected as much. I am considering doing the same.
Now folks in the long run once everyone gets adjusted to the “New Normal” find the right job, you are going to see the hyperinflation kick in again. You will be able to make more and afford more. I encourage you highly to be a home owner because going forward; rent will always be running ahead of your income. If socialism is what you are looking forward to, that may be your only option.
If you own rentals and going long why even consider selling? Even if the prices come down in the short time, you are going to have buying and selling costs of about 15 percent plus loss of rent and possibly paying a lots of taxes if you don’t find a good place to reinvest your money. What a better place than real estate.
Here is my two cents. You may see it different. This is just my personal opinion you have to do what you think is right for you.
Best wishes to all.