There is a rise in real estate prices, all mainly due to the pandemic.
There is high demand but very low stocks and it is creating a frenzy. Kim Baldonado spoke to a real estate agent and asked for some advice.
Analea Perez is a first-time home buyer.
“The ads I saw would go live, the ones I liked, I would check them out a few days later, and they were on hold,” she said.
In many parts of the country, including Southern California, the real estate market is downright wild.
Leah Guerra is a real estate agent in Los Angeles. We asked him how to navigate the current frenzy.
First, why is the demand so high?
Much of the demand from buyers is driven by historically low interest rates, so it’s fundamentally cheaper to buy than before. Although the prices go up, your monthly payments are more affordable.
Why is the supply of available housing so low?
There are just not enough salespeople selling, and part of that is because they fear they have nowhere to go.
The last time we saw the housing market rise like this it fell, causing massive foreclosures, but Guerra says that is not likely to happen this time around.
“Before the Great Recession there was a lot more supply than demand and the loan qualifications weren’t as tight as they are now. Anecdotally, almost every client that I have, no matter how long they’ve been working and how many assets they have, the loan approval process is very strict, and you didn’t have that before.
For buyers, Guerra advises being prepared to bid quickly by researching neighborhoods and pre-underwriting for a loan, as pre-approval is no longer enough.
“By the time you go to see the house, if you’re not sure, someone else is already making an offer, and it will be gone in a few days,” Guerra added.
When making an offer, consider giving up or tightening up the contingencies.
“I never advise waving your inspection eventuality, you have to know what you are getting into, but by all means, you have to shorten it because the seller wants to know this deal is going on. They have eight offers to choose from, ”she said.
What if you waited for the prices to drop?
It probably won’t happen. What is likely to happen is that the price appreciation will slow down.
While prices may not rise as quickly, interest rates are expected to rise, so being prepared to act quickly and being flexible will help.
“I started out by thinking that I wanted something very specific and as I saw how the market was going I had to adapt and be flexible,” said Perez.