Maybe you heard that vintage cookware was selling well on online auction sites and started scouring your cupboards and basement. Or perhaps when the GameStop stock started rising you considered getting in on the action. Trends of surprising market value are always tempting but rarely do they turn out to actually be as valuable as anticipated.
Except real estate during the pandemic, perhaps.
While the Springfield and Burke areas were already experiencing a seller’s market, economic and health situations over the last year have tilted the market toward the seller even more. And the result has been quite a phenomenon.
The pandemic has spurred buyers and sellers. Across the U.S., home sales and prices on everything from new construction to condos, and especially single family homes in our suburban areas, has soared in the last year.
Truly, low interest rates, coupled with a demand for homes that continues to exceed supply, has led to list prices steadily climbing, particularly in the suburbs near major cities as well as in more rural areas.
But while the market seems better than ever all across the country, it also seems that prices are starting to rise artificially, and that many people with older or poorly maintained houses are trying to get more for them than they are actually worth.
Just like that old collectible you heard was worth bank that you’re scrambling to locate in your attic, it makes sense that after hearing spectacular stories about people cashing in big on their properties many homeowners might be tempted to see if they can do the same.
The challenge, though, is realizing the difference between prices rising due to market forces and trying to get rich quick by demanding unrealistic prices.
Agents, who can usually help to properly price sellers’ homes, have reported that some clients are pushing to list their homes far above market value. Some are calling this “pandemic greed.”
During downturns, the expectation is that house prices will decline, not increase, and certainly not increase at such extraordinarily high rates. Yet in 2020, despite the severe pandemic-induced economic downturn, the index of house prices rose over 15 percent.
And — perhaps due to some pandemic greed — home prices across the nation continue to defy reason as they keep rising sharply.
Not all homes are priced unreasonably, of course. But the very idea of pandemic greed doesn’t sit well with buyers who were anticipating a housing meltdown marked by rock-bottom prices. The problem is, unlike the last fiscal crisis in 2008, there aren’t more homes for sale than qualified buyers.
Many buyers, trying to take advantage of low interest rates, needing more comfortable abodes in which to spend their stay-at-home days, and wanting to put their savings into an investment more secure than stocks, have resorted to waging bidding wars over the historically low number of properties on the market — many of which are already priced higher than usual.
But in the face of pandemic greed, especially when so many sellers are achieving the prices for which they are asking (or more), what is a smart buyer to do?
Look at the comps. Taking into account what comparably sized and situated homes in the area have recently sold for — not in the last few months, but in the last few years — will give buyers the best idea of what homes are actually worth. Going back two to three years will allow potential buyers to see how the average price per square foot of homes in the area has shifted.
Savvy buyers know that a huge jump in just a few months’ time is a red flag.
Of course, working with a professional real estate agent can help both buyers and sellers to avoid unrealistic pricing and bidding.
There is a valid reason for the recent escalation in home pricing — mainly demand exceeding supply — but no one wants to pay an exorbitant amount for a home that won’t be able to retain its sales value.
Working with a professional agent who has knowledge of the local market can help buyers, even those who are prepared to bargain fiercely for a home, to avoid pandemic greed. And, since pandemic greed is being more widely recognized and shunned, professional agents can guide the pricing strategy and help sellers to truly get the best value for their property as well.