Why People Are Overpaying So Much For Houses Right Now
Why are so many overpaying for houses by so much these days?
Who are these bullish buyers willing to pay high premiums for properties and why are they doing it? What does that mean for investors who want to enjoy the upside, but not end up bankrupt?
Who Is Paying So Much For Houses?
All types of buyers appear to be paying top of the market prices and more.
This includes retail home buyers all over the country who are looking for new places to live. Then there are big Wall Street backed funds and iBuyers who have been buying up entire new home communities at 50% or more over their top of the market values.
Why Are They Paying So Much?
There are a variety of factors driving this activity, including:
- Those who are banking on continued inflation and long term value
- Those believing homeownership may soon be a limited luxury for the wealthy
- Those must deploy their capital at all costs
- Movers with cash going into cheap areas
- Buyers using low interest rate loans, and are finding payments cheap
- Those who used Zillow to guess home values
The Trap
Just like the stock market and cryptocurrency, the biggest players and market manipulators like to suck in all the money before a correction. Those stuck holding the hot potato when that happens get burned.
This is okay if you are wholesaling and double closing with transactional funding. You won’t get stuck. However, if you are speculating and holding it, you could end up reliving a rerun of 2007.
Use It To Your Advantage
If others think properties are worth it for them at those prices and they are happy to pay them, you can serve them, even if you are making offers for more than you would normally feel comfortable. Sell in bulk to funds and wholetail to regular home buyers.
Though if it isn’t selling, understand you have to seriously drop your asking prices, and already have that priced into the offer you made.
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