GUEST EDITORIAL: MIKE MANERI
Mortgage Equity Partners
One question I have been asked a lot lately: Is now the right time to buy at master-planned communities in Charleston like Seabrook or Kiawah Island.
The answer to both questions is an emphatic “YES!” Let’s break down why:
Less demand at the moment – In the words of Warren Buffett, “buy when everyone is selling, and sell when everyone is buying.” Higher rates have driven a lot of buyers out of the market temporarily. That is positive for those that are still in the market. It means more negotiating power for the buyer because the seller is receiving less offers and has less leverage.
Demand will increase as rates come down – Many people are “waiting” right now to get back in the market when rates decrease, which will surely happen over the next couple years. But guess what? If the majority of potential buyers get back in the market at the same time, what do you think happens to home prices? As you would expect, they will increase because sellers will get more offers and have more leverage to command a higher price for the home.
“Trapped homeowners” – Many homeowners at the moment are struggling with leaving their current residences. They currently have low fixed mortgage rates in the 3’s and can’t bring themselves to give it up for rates in the 7’s. But as rates come down over the next couple years, those homebuyers will be back in the market. Once again, that means more demand and higher sales prices to come. Don’t get caught in that trap.
Be careful what you read – Many prospective homebuyers read national news articles about the housing market. Often, they are far from credible as it relates to the market they are buying in. For example, the housing market is VERY different in Flint MI than it is in Seabrook Island SC. Make sure you are consulting local experts to find out “the real story” of the location you want to purchase.
They aren’t making any more land – when you find a highly desirable location such as Seabrook or Kiawah, the prices are dictated by demand and inventory. In some parts of these areas, a buyer can still find reasonable prices. However, as the available land continues to get purchased and new homes continue to get built, that inventory slowly reduces each month. Once it’s gone…. it’s gone. When its gone, the only option is to purchase a “re-sale” and once again the scales of supply and demand are far out of whack driving prices higher. You do NOT want to wait until that happens because at that point, most buyers will be unable to afford the rising home costs.
Recommended Reads: What Buyers (& Sellers) Need to Know About Financing & Competing With Cash Buyers.
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