There’s no question that today’s market is crazy – too many shoppers and not enough inventory. It’s a classic supply and demand problem. That is how markets work.
The dizzying price increases we’re seeing are due to ever-escalating expectations of what buyers need to do to get a house. This does not always correlate with what a house may be worth, it’s more about what buyers are willing to pay.
Multiple offers come in on a listing, escalation causes run up the price and the seller gets top dollar. The next seller sees that number and is encouraged to price at that new higher level. Buyers – themselves a reason for the rising prices – then learn they need to reach higher on the next home.
It’s not easy for a buyer to crack this cycle. It takes being aggressive and bold. Some buyers need to lose a few rounds before they’re ready to play their best hand.
In today’s market, doing what it takes seems to pay off for buyers. We’ve seen home values increase from the time that a buyer puts it under contract until closing. These lucky buyers not only got the house, but already have some appreciation.
