I’ve been working with a friend who is in search of his first home. This is not typically my aim, but I decided it would be good to help him out. I figured it would be easy. A $300k budget, the ability to handle a remodel, and plenty of enthusiasm for the process. This was what I thought. Six or more months into the home search I feel as though I may have made a big mistake. This market is tough. Like, super tough. You like that boring ranch on a half acre lot? You know, the one with the water in the basement and the rotting roof? The one that isn’t even cheap? Yeah, so does everyone else. Take a home buyer and let him find interest in one or two homes that each sell before he can buy them and then stand back and look at the impatient mess that the market has created. Hot markets breed hot markets. Confidence, it seems, has never been higher, and with that confidence comes a tidal wave of buyer mistakes.
Because the papers are telling people to buy houses. Economists say buy. Lenders, buy. Realtors, BUY. Everyone wants you to buy a house. If you don’t own one, buy. If you own one, buy another. If you own seven, buy the eighth. After all, Lawrence Yun says you should buy. In case you don’t know Lawrence, he’s the chief economist for the National Association of Realtors. In spite of his research, he’s never found a time that wasn’t right to buy a house. Buy in 2008, because buy! Buy in 2009 because the market has pulled back. Rinse and repeat for the following four years. Then buy in 2013 because the market in rebounding. Then rinse and repeat that mantra from then until now. Buy, buy, buy.
And this is the attitude that has fueled a most remarkable level of growth in our primary housing market. Oh, I should add, this is not a post that’s very inclusive of the Lake Geneva vacation home market. This is about the primary market, where you live and where I live, not where you vacation and I vacation. This is the market for the people, and it’s absolutely on fire. McHenry County is on fire. Lake County, too. Kenosha County is booming because people from Illinois who don’t like high taxes are moving to Wisconsin to pay higher taxes. Interest rates have risen, but they’ll be rising some more, so buy! The narrative is the chorus, the refrain, buy, buy, buy. All of this is fueling a most incredible, dynamic market.
The Chicago Tribune chimed in on Sunday with an article that says- you won’t believe this- that it’s time to buy. Experts say you should buy a home this year. Buy one now, don’t be left behind. And this is the sort of thing that my young friend, Mr. Primary Home Buyer, is reading. Everyone is buying, so why not me, why not now? Well, just maybe, because you can’t quite find the right house. When we started our search my buyer wanted to find lots of land. Ten acres would do, but twenty would be better. Thirty, ideal. The search went on that way for some time. Where has the search led us today? To $319k vinyl ranch homes on half acre lots. These are sent to me with the link to the property and a note “Not bad, right”.
No. Bad. Terrible, awful, bad. Because everyone is buying the feeling is that buying is a must. Buying is a requirement. Buying is all there is and without it there is nothing. Inventory is low, this we know. And this creates a bit of a difficult situation for would-be-buyers. If you’re buying a lakefront on Geneva, you know that not only is inventory limited today, inventory is limited at almost all times. It’s a low inventory market, in times good and bad. If you want something perfect, you’re going to have to compromise and buy something less than, because you can fix the things you wish were different. The market on the lakefront is rare and valuable and it’s not at all like a primary home market. But that beat up ranch on 7 acres for $299k that you’re looking for? Well there might not be one for sale today, but I’ll bet you all of your money and a little of mine that there will be one coming to market in the next several months.
So my advice for the primary home buyer in this market? Be patient. Yes, interest rates are slowly rising. Yes, that’s too bad. But why buy a house you hate to save a quarter point on a mortgage rate? Find something you love, because if it isn’t for sale in May then there’s a good chance it’ll be for sale in June.