If you’re considering selling your house in the next two years, do it now while interest rates are low, buyers are buying, and home prices are high.
In 6-12 months, most homeowners in forbearance will want to sell. Inventory will go up, demand will go down, and home prices will drop.
If you’re going to sell, the most important thing is to price your home correctly, so it sells fast. This increases your chance to get multiple offers for it. If it sits on the market too long, you will end up chasing the market down.
Is it time to buy?
Here are 3 considerations:
If you need a place to live- If you plan to own a house for at least 5 years, and you have a stable income, take advantage of the current low interest rates. Find an aggressive agent who can get you a good deal.
If you want to time the market. If you’re looking for the best deal on a house, wait 12 months when there’s a high probability that prices will drop.
If you’re an investor. Don’t buy now when the market is at its peak. Stash cash and watch. Don’t fix and flip because of market volatility.
You own a house. Is it time to sell?
Hi there. It’s Kevin Ward, the founder of Yesmasters Real Estate Success Training, helping you get more YES and more success in your business and in your life.
In this video, it’s not just for real estate agents. It’s also for homeowners or those who are in the real estate market to buy or sell, and it’s also for real estate agents, because as a real estate professional one of your responsibilities is to give good information that is actually helpful to people who are looking to sell a house or buy a home.
Now, this is about the housing market. This is not about real estate investing. This is about for owner occupants, people who are looking at, “Should I buy now? Should I sell now?”
Now, I did recently another video on the housing market, the real estate market for 2020 and beyond and what’s going to happen, is it going to crash and if so, when, and all of that. I’ll put that video in the link below or down in the description below, so you can, with the links https://youtu.be/6-eyR_zpb4Y, so you can watch that video. I recommend that you watch that video, because it’s going to explain a lot of the background of why I believe what I believe about whether right now is the time to sell or time to buy.
We’re going to just dive right into it.
IS IT TIME TO SELL?
First question is, you own a house. Is it time to sell? Now, it may be your residence, it may be a vacation home, it may be an Airbnb. Whatever it is, if you own a house, is it time to sell? Short answer, if you are considering selling your house in the next two years, do it now. The sooner, the better.
Why am I saying that? Well, one, if you are happy where you are as a homeowner, if the homeowners are happy where they are, they like where they live, I think that you could afford the payments, you should stay. Okay? You don’t move out of your home because the market says you should sell. Okay, but if you’ve been thinking about moving, you’re thinking about, let’s see, you may be thinking about downsizing or relocating or whatever. If selling your home when you can get the most amount of money for it is important to you, we have probably passed the peak.
Now, you look around the country, and they’re talking about home prices continue to go up and all that kind of stuff. All of that is temporary. Now, for a whole lot of reasons that we talked about in the previous video that I’m putting the link down below, to do that. The truth is, we don’t know how long this hot market is going to last for sellers, because right now as I’m recording this in early June of 2020, the real estate market is still fairly hot in most big markets across the United States. We don’t know how long that’s going to last.
Now, why is it that way? Well, one, because there’s a lot of pent up demand. There’s been a lot of, there’s been a very low inventory and more buyers than sellers for a long time, so buyers have been wanting to buy. Interest rates are insanely low. They’re at record lows right now, so buyers are out there wanting to buy. What we don’t know is how long that is going to last.
THE REAL NUMBERS OF THE ECONOMY
Why do we not know? Well, because when you look at the real numbers of the economy, the real numbers of the economy, the things that drive the economy like jobs, like consumer spending. 70% of our GDP is consumer spending. Consumer confidence has massive parts to this. The stock market, as I talked to you about in the last video, the stock market is completely detached from reality. The stock market is being purely propped up by a federal, the Federal Reserve’s pumping money into the markets. That’s it. It has nothing to do with the, how, what businesses are functioning, profitability, revenue, price earnings. Has nothing to do with reality. Okay?
We got nearly 42 million unemployed as I’m recording this. By the time the numbers are released this month, we may, this week, we may be over 42 million. Okay? Now, and here’s the thing. If there’s only two million in this week, and they’re, you know, it’s been like, continually going down, but they’re still saying, “You know,” … If it’s two million unemployed this week, understand that is still more than three times higher than the worst week ever recorded, before the pandemic. Okay? Three times more, one week, and it’s one of the best weeks we’ve had in two and a half months. Right?
Things are not good in the economy. Businesses are shut down. Businesses are closing, going bankrupt. All of that. A lot of the jobs that have been lost are never going to come back. It’s going to change the reality of how things are happening. Consumer spending is, the economy is going to contract. It’s already contracted, and it’s going to stay contracted.
Because of all of that, you have got an economy that is not doing well. Now, on top of that, right now you have tons of homeowners, nearly 10% of all homeowners in America, are mortgage holders, in America, are not making their mortgage payments. They’re in forbearance. Now, six months from now, that forbearance runs out. They can extend it for another six months, but at the end of that 12 months, all forbearance is going to be gone. People are trying to get back to normal. See if some point all this government stimulus, the government being the backstop for all your financials is going to go away.
At that point, there’s going to be a lot of people who don’t have jobs, whose income has dropped or disappeared. They’ve been trying to find jobs. They’ve not been able to, and they’ve been able to stay in their house because they haven’t had to make payments. Now, they got to start making payments again. They can’t make payments. Guess what? Six months, a lot of houses are going to start coming on the market. 12 months, a lot more houses are going to start coming back on the market.
When you have a big chunk of inventory hit the housing market, buyers are going to have more to choose from. There’s not going to become an increased buyer demand, so all of a sudden to equalize all that, home prices start to drop.
RIGHT NOW IS THE TIME TO SELL
If you’re thinking about selling in the next two years, right now is the time to do it because right now, buyers are still buying. Interest rates are still low. There’s still, home prices are still high. If you’re thinking about selling, sell it now.
Now, if you are going to sell, the most important thing is that you price your home correctly from the beginning so it will sell fast. The worst thing that you can do is price your home where it sits, and then you start having to chase the market down, if the market starts going down.
Two things work against you if you don’t price it right from the beginning.
Number one, what always works against you is, when a house hits the market the very, at the very first couple of weeks it’s on the market, you have the most buyer interest because all the buyers that are already out there looking for a house like yours, they’re going to all come see your house in the first two weeks. Any new buyers that are coming into the market are going to be there.
After that first two weeks, they’ve already either liked the house, made offers on it, or they’ve checked it off their list. It’s gone. Now, all you get is the new buyers who are coming into the market, who might be interested in your home. They tend to be slower and more cautious. The people that have been in the market for a while, those buyers, when your house hits the market, they’re ready to buy a house. They’ve already put offers on houses and lost them because of multiple offer situations, which we’re still seeing tons of. They’re like, “Oh, this is the house for us. We’re not going to lose this one.” Bam, they bring in their best offers.
If you have it overpriced, they come in and go like, “We like the house, ugh it’s overpriced.” They don’t make offers on it. By the time you try to correct the price, they’ve already gone like, “Nah, we’ve already turned that one down.” If they do decide to come back to it, they’re going to come in with lower offers. That works against you. It’s just the fact that a house sits on the market, it’s like a loaf of bread sitting on the shelf too long. People start going like, “What’s wrong with that house?”
Second is, if the market housing prices start dropping, now you’re not only dealing with time on the market, you’re also dealing with chasing prices at a downward market. If you’re going to sell right now, if you’re going to sell right now, price it aggressively from the beginning. It creates the best chances that you will sell your house with multiple offers, and when you sell a house with multiple offers, that’s how you get the highest price ever for a house.
If you’re thinking about selling, should you sell now? The answer is, yes. Absolutely, positively. Now, can you wait six months? Yeah, you could wait six months and very likely, if you wait two or three months this summer, still going to be okay. If the bottom drops out and consumer confidence stops, and the Feds stop pumping money in the stock market, if people get scared and the stock market starts dropping, then all hell breaks loose. At that point, there is no bottom. Right now, there’s no bottom to how far this could go, and if the stock market starts falling, then people really freak out because everything else in the economy is already bad. The stock market is kind of making people go like, “I guess it’s not as bad as it looks.”
Okay, so as long as that’s happening, people will still buy a house, but when that goes bad, people are going to be in a tailspin. All right. That could happen in six months. That could happen in 12 months, but chances are, with all the economic indicators the way they are right now, the economic situation, home prices are not realistically going to continue to increase. We have passed the peak. If you’re thinking of selling in the next two years, sell now.
IS IT TIME TO BUY?
All right. What about, and buying a house, is it time to buy? All right, so here’s my best advice on, “Should I buy a house now?” There are three considerations. Number one, if you need a place to live. Number two, if you’re looking to time the market, and number three, if you’re an investor. I’m going to answer the question, “Is it time to buy?” From all three of those perspectives.
Do you need a place to live?
First, is it time to buy if I need a place to live, which means, I’m renting or I sold my house, and I need another place to live. Is it time to buy, or should I rent or should I stay put, and so forth. Well, here’s the deal. If you need a place to live and you want to own a house, and you plan to own it for five years or more, you’re probably going to be okay if you have a good job, stable income, and you’re not overextending yourself in terms of qualifying for the mortgage and being able to make the payments. Okay, but again, there is a lot of economic instability and uncertainty going on.
If you are going to buy a house because you need a place to live, here’s what’s going in your favor. One, record low interest rates, that’s awesome. You’ve got record low interest rates, that is in your favor. If you’re planning to buy this house and hold it for five years or more, you’re going to do fine as long as you got … Second is, your income situation is strong and stable. Obviously, you’ve got the credit. Got the down payment. You got the money to be able to get the house.
Here’s, the key is, you want to have an aggressive, strong agent that can help you get a great deal. Do not pay a premium for houses right now. Now, you’re still, if you buy now, you are going to pay today’s market value. Depending on where you are, that may be starting to go down a little bit or it may still be really, really strong.
Make sure that you do not overpay. You need a strong, aggressive agent that will go in and get you the best terms and the best price, and so you’re getting a good deal today, with great financials on your part and a great interest rate. You plan to stay in it for five years or more. You should be okay.
Are you looking for a great deal?
Now, should I buy now? Well, the second consideration is, is it time to buy, is, are you looking for a great deal, and I want to time the market, which means, “I don’t want to buy a house, even as a personal residence, I don’t want to buy a house when I’m going to pay top of the market.” Well, if you are looking to time the market, meaning, “I want to wait until home prices are good.” Are home prices going to up or are they going to go down?
High probability, just like I got talk, talking about with, is it time to sell, a very high probability over the next 12 months, home prices are going to drop. If you’re looking to time the market and want to get a good deal, you want to get the most house you can for the money and so forth, I would wait 12 months. Now, the key is, keep watching, keep watching, keep watching. I would plan on waiting, if you’re looking for the best deal on a house. In 12 months, we could be in a totally different world. In 12 months, you may look at it and go, “You know what? Home prices are just now starting to fall. I’m going to wait another 12 months.”
It goes back to, do I need a place to live and I want to own a house? If you do, then you go back to my first answer of, if you got a great agent, get a great deal, you got low interest rates, and work on getting a great deal, and make sure you got a good job and good income, you can get a house now. You’re going to be fine, if you’re planning to own it for five years or more.
But if you want to time the market for prices that are going to be right, wait 12 months.
Are you an investor?
Then third, if you’re an investor, “Should I buy right now?” No. Just to put it real simple, this is not the time to be buying if you’re an investor. Now, are there exceptions to that? Of course, but in this general rule, you don’t buy, invest in real estate when the market is at the peak. Okay?
What do you right now? You stash cash and watch, and you watch, and you watch. When you get, when you start seeing some stuff start to happen, and you get excited about something, be very, very cautious. Now, I would not be doing any fix and flips right now, because there’s too much volatility and uncertainty about what could happen in the housing market while you’re in the process of flipping a house. You could lose a ton of money and get hung out to dry. You don’t want to do that.
Okay, so stash cash and watch the market. Here’s the deal. If and when you do find a great deal, what constitutes a great deal? Cashflow is king. You are not going to be buying in the next couple of years for appreciation. You’re going to be buying for cashflow, so if you can find a great deal in a stable real estate market, especially in cities that are emerging, so where the good economic growth or have had good economic growth … Places where people are going to in the new economy, so you’ve got emerging, an emerging market with strong job growth and all of that kind of stuff. There may be some opportunities to buy some investment property for, some rental properties that you can get good cashflow on.
Now, this whole conversation here is about the housing market, not the commercial real estate. I should have said that earlier, so if you’re thinking about like, “Well, what about retail, restaurants, where,” you know, all that kind of stuff, one, I would not be buying. I’m watching the commercial investors, and they’re going like, “We’re not buying anything right now.” Anything that’s travel industry related, restaurants, retail, office space, all of that is in dire straits, so right now’s not the time to be buying all that. That stuff is going to be falling. There’s going to be great deals to be had in the future. There’s going to be some redevelopment opportunities, it’s going to be awesome.
Right now, cautious, conservative is the name of the game when it comes to buying anything in real estate, whether you’re buying it for personal use or investing.
What are your thoughts? What are you hearing? What are you seeing? What are you doing? If you have any questions, comments, post those down in the comments section below. If you like the video, give it a thumbs up. Subscribe to the channel, if this is your first time here. Thanks for watching, and I’ll look forward to seeing you on the next video.