June 24, 2010 Leave a comment
In the last weeks there have been so many posts relative to the housing numbers and the expiration of the First Time Home Buyer Credit. What nobody seems to be writing about are the numbers of home buyers coming into the market who that credit does not apply to. Homes are selling. It is a shift in numbers. There are less units selling at higher price points. I am further seeing the market go from glorified renters to truly qualified homeowners. The market is now about buyers who can afford to buy.
The first time home buyers are not effected just because a tax credit went away. One factor is the glut of inventory as a result of short sales and foreclosures in the price range these buyers are typically in. In some neighborhoods distressed sales are the only sales. The other is most of these home buyers actually need money now for a down payment. Until they save enough they are renters.
I am working with some first time buyers. Because they typically need to put 10-20% down now they are waiting until they save enough to buy something they see themselves living in for longer than 2-3 years. They want to grow into the space than grow out of it. The effect on many parts of the Chicago market is these buyers are not buying $150,000-$300,000 condos. They are starting in the $350,000 price range or higher. Many of these buyers have the assistance of their parents and are coming in with substantial down payments. They are not the first time buyers we have seen in the past years.
Based on my recent sales and activity as well as watching what has been going under contract in the MLS, the mid to upper bracket market is really starting to move. The buyers that can truly afford to be homeowners are taking advantage of opportunity and pricing. From $350,000 into the millions property is moving. It has to show the best and be priced the best. It might sit there at what real estate agents and their sellers think is a great price but all the sudden the buyers come with offers. It is not unusual that once one buyer wants the home so does one, two or three others. Suddenly somebody wants what somebody else has.
And we have to remind our sellers: It’s not where you the buyer starts, it’s the price and terms we get them up to! Its called negotiations.