The property market in our subdivision is…bonkers.
There is very little property for sale anywhere in the USA right now. I have been looking at Hawaii and California at intervals, and our across-the-street neighbor is a realtor.
She confirmed my suspicions a few weeks ago when we briefly discussed the state of the market. Normally, in a price boom, there is a lot of inventory as lots of people are trying to move up or cash out, but there are also a lot of buyers, so prices are being bid up.
Right now, prices are booming, but there is no inventory to speak of. There are very few properties coming onto the market, but there are willing buyers. So any time even a half-way decent property comes onto the market, there is an unseemly stampede and, quite often, a bidding war. This results in many properties, even sub-standard ones, going for way more than the initial asking price. This has been happening in Hawaii, where even tired condos from the 1960s and 1970s have been selling significantly over the asking price. (Quite why a 367 square foot tower block box should attract such interest is not clear to me, unless speculators are buying, which is very possible).
Here in our subdivision, a very nice 4 bedroom 3000 square foot 1978 house went up for sale 8 days ago, and is now Under Offer. Not sure if it is under offer for more than the asking price, but we saw lots of people visiting it last weekend immediately after it hit the market. The house is well looked after, with an excellent frontage, but no pool, and the interior is dated. (All medium color wall wood, typical of many houses here built in the mid-to-late 1970s).
2 doors down, a property with not much kerb appeal, also appears to have sold, after being on the market and vacant for 3 or more months. We saw evidence of people moving in this weekend.
We have mentally upped the value of our house based on watching local price trends in this area. It may not help if we stay in the USA, because prices are rising everywhere, but if we move to Costa Rica, it might give us the ability to buy a better house there.
UPDATE – The latest feature of the market is apparently that sellers are demanding that prospective buyers waive their right to an inspection in order to even be considered as buyers.
From a safety perspective, this would be unacceptable to us. When we lived in a rented house in 2009, we found out that the property company that owned it had filed Chapter 7 bankruptcy, which meant that the house was up for sale. We actually attended a court hearing in Fort Worth to validate this. When the trustees confirmed that the house was for sale, we ordered up an inspection. When we both returned from work, the inspector was finishing his report on his laptop in the kitchen. He said “you will have a 30 page report in a few minutes, but I can sum up my findings in one word. Run”. The report detailed a long list of issues, which would have cost upwards of $70k to fix before we could even be sure of getting a mortgage. We passed, and found our current home a few months later.
Asking buyers to waive an inspection is understandable from people who want a quick sale. It enforces information asymmetry, with the buyer being less informed than the seller. This is favorable to the seller. Some people will take the gamble. We won’t.