courtesy: tessaschultzlaw
If anyone thought that the housing crash of 2008 had brought sanity to people, they might be wrong.
A housing shortage, created by the slowing down of new construction prompted by the 2008 housing bubble, is creating a new feverish race to obtain the few houses available on the market
If anyone yells 'deja vu', they're not alone.
Fewer houses available are creating a bottleneck: housing supply is the lowest since 1999. People who have waited for their foreclosure blemish to fade in time are lining up, eager to recapture their dream of owning a home, and are lining up together with first home buyers who are trying to get back into a market they believe is now getting ready to soar again.
But is it? What is astounding is how quickly the market has turned from dead in its tracks to full steam ahead again in such short a time.
One of the reasons for the feeding frenzy is the fact that rents have also skyrocketed, exploiting the housing crunch, and people want out of the squeeze.
What is also interesting is that people are also eyeing properties again that are in the higher price ranges. Many people had expounded on the fact that the housing crash had left many with the realization that less is better and that the mega mansions were out. They are being proven wrong.
Real Estate property, notwithstanding its ups and frightful downs, is seen as the ultimate investment in a world with few certainties. And that is what is bringing people back into the market. There is a feverish expectation that the price of housing is going to skyrocket again, and that prices are going to go even higher than before the boom. And that is seen as wise investment. So buying a house, in the end, is not the dream everything thinks it represents, but the common man's choice of finding an investment that is not so difficult to decipher.
It's almost a case of whiplash. Only a few months ago, it was still a buyer's market. That is no longer the case, as recent statistics are proving. Brokers are now cherrypicking their prospective buyers, and the properties can often go for a higher than asking price. That is a strong seller's market.
What is really astounding is also the return of the no inspection clause. Clients are advised by brokers to either pay for their own inspection before bidding, or to have an inspection contingency clause only if major defects are found, so that they do not hold up the process with small or aesthetical issues. That some people warn, is a dangerous trend. A number of foreclosure happened when eager investors waived their inspection clauses, only to find that there were major or even dangerous structural faults to their acquisition.
Either way, real estate professionals are now receiving multiple bids for housing, and that spell bad news for any attempt at keeping housing prices at their true market value.
partial source: Bloomberg 3.2.13
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