Don’t let your market mindset be muddled by these mistakes.
Here are the top three mistakes I’m seeing people make when it comes to navigating this market:
1. Comparing it to the one that preceded the last market crash (2006 to 2008). That market was very different from this one, as there were many factors at play back then that we don’t see now. We’re seeing a whole lot of demand, low interest rates, and conventional lending principles that are creating a stable housing market. What we had before was chaos; what we have right now is everywhere. If you want to buy a home in, say, Grand Rapids, Michigan, the market will still be competitive—just like in Denver, Colorado, Austin, Texas, or here in Sonoma County.
2. Thinking that interest rates will stay low. I’ll tell you right now that that’s not going to happen. The Federal Reserve will hedge against inflation, and the only way they can do that is by letting rates rise. We’re already seeing this across the board: Homes are costing more. Rates will go up, and it’ll affect your affordability. You have to understand what you can get for your current rate and what you can get if it goes up by half a point. Look at those payments and know what your differential is.
3. Letting the past dictate the present. This one applies to sellers. Remember, we live in micro markets. Just because your friend’s home sold a block away for a certain price three months ago, doesn’t mean yours will sell for the same price now. With the ongoing COVID situation, people coming back from vacation, folks making moves before the school year starts, and everything else that’s going on, there’s a lot happening. I can’t tell you the market will be exactly like it was two years ago, or three years ago, or even last year. It’s different, so don’t let the past dictate the present. In fact, this market is changing every two weeks or so.
As always, if you have questions about this or any real estate topic, don’t hesitate to reach out to me. I’m happy to help.