Housing Inventory, Prices and “The Deal”

Getting the Deal DoneWe know everyone like a “deal”. The deal is something you want and end up buying at a huge discount to what other similar products are priced. In this case, we’re talking about houses.

It goes without saying (but I’ll say it anyway) that sellers want the absolutely most money they can get from selling a house and buyers want to pay the absolute least amount. Buyers want ” a deal”.

The real challenge with getting a “deal” is something called supply and demand. If there is something in short supply but there are a lot of people that want that something than people who have that something can pretty much ask what they want for it.  Replace the word something with house.

Now, housing isn’t quite that simple. There is something called “the market” and that’s a combinations of things including what other, similar houses are going for in the location (i.e., neighborhood) you want to live. Sellers can’t quite just make up a price and get it anymore than buyers can make up a price and get it.  Having said all that, the market moves both up and down.

The Deal on Housing Inventory

As I write this, housing inventory is pretty slim. What that means is that there really aren’t enough people selling their houses to satisfy the number of buyers. Buyers , in turn, have a limited number of houses they can look at in any given neighborhood and in any given price range. It’s not hard to look at, say, 20 houses and not see one that really fit the bill. Of course, houses come on the market all the time. It’s kind of random but it’s quite possible that the perfect house for you is going to come on the market next week or next month. It just isn’t on the market right now and it’s impossible for real estate agents to know what people are thinking about in their living rooms.

One day, though, when you least expect it, the perfect house will come on the market and you and everyone that has the same criteria as you will be rushing to look at it. Some will make an offer the seller will accept. Some, still looking for “the deal” will put in a low offer and get rejected – the seller telling the buyer “No soup for you!”

The Deal On Housing Prices

Because housing inventory is low – few sellers, more buyers – housing prices rise to slow the demand. This is really sweet for sellers because the price of their home is going up (for now). Not so hot for buyers who must compete against other buyers or purchase homes that may need some repairs or, in some cases, may come across a seller who got a little ahead of himself, priced his home too high to begin with and allowed the house to languish on the market. Yes, “the market” will spank the seller who tries gouging buyers.

The bottom line here is that moderate income, first time home buyers are going to have a very hard time finding a great home for the amount of money they can afford to pay for it. That’s where the mortgage officer comes in and, many times, people who aren’t making a ton of money, have had credit challenges, have too much debt or any number of other factors cannot get a mortgage for enough to be able to buy the home they would like.

No soup for you.

Expectations

The key is to get your expectations in line with reality. Know what you can afford, Research the market to see what might be available in your price range and the neighborhood you want to live in and then find a competent Realtor to help you get it. There really is no such thing as a “deal” in the real estate world unless you happen to have gobs of cash and the willingness to make a lot of repairs.

Days On Market in Greenbelt, MD

This is a chart of how long homes stay on the market from the time they actually go “Active” to the time they get a contract accepted.  The red bar are for detached homes. The green bar is for townhomes.

About Ken Montville

Ken Montville is a Realtor® and Associate Broker with RE/MAX United Real Estate in the beautiful Maryland Suburbs of Washington, DC. He has been selling nice homes since 1999. Way back in the 20th Century.

When Ken Is not doing the real estate thing he can be found all over social media in places too numerous to mention and he listens to jazz, reads a little (mostly non-fiction), hangs out with the Rotary Club of College Park, MD and can be found blogging at MDSuburbanHomes.com