How To Avoid Panic Buying In The Current Housing Market
The term 'panic buying' has been thrown around quite a bit during the COVID-19 housing boom. Housing inventory is at record lows, and housing demand is at record highs. Economics 101 tells us that this is the recipe for a pricing shock -- according to data compiled by S&P CoreLogic Case-Shiller US National Home Price Index, home prices in the United States have increased 12% from March 2020 through February 2021. This unprecedented spike in home prices is driven by record low interest rates and a rapid shift to a work-from-home economy that demands more rooms, more space.
We have all heard stories of listings on the MLS receiving dozens of offers, above asking price, sight unseen with no contingencies and going into contract in just a few days. We have also heard countless frustrated homebuyers lamenting about the fact that if they want to buy a house, they are going to be forced into a bidding war for a house that they would not have even considered purchasing pre-pandemic.
In other words: buyers are over-paying for undesirable inventory.
This is panic buying. Panic buying is irrational and dangerously value destructive. This simple guide is your resource to help you avoid panic buying.
In our Medium post, Wholesale Real Estate: The World Of Real Estate You Probably Know Nothing About (But You Should), we introduce an important source of housing inventory that most "retail" home buyers don't know about.
Wholesale real estate is a house where the owner (seller) is under contract with a wholesaler (initial buyer) who is selling the contract to another buyer (end buyer). Most of the time, end buyers of wholesale real estate are professional real estate investors (i.e. fix and flip and rental property investors).
Additional reading: Wholesale Real Estate 101
Where to find off-market housing inventory
1. OfferMarket
OfferMarket is a marketplace for wholesale real estate. There are hundreds of off-market deals that you can browse on our platform and buy with ease, without an agent.
Join the pros and subscribe to OfferMarket deal flow:
2. Facebook Investor Groups
There are countless Facebook Groups dedicated to wholesale and off-market real estate, many of which are local. Join these groups for a steady flow of off-market deals. While you're at it, join our Facebook Group: Real Estate Marketplace: Wholesale, For Sale By Owner.
3. Network with local wholesalers
There are probably several reputable wholesalers operating in your local market. You can find them through local Facebook Groups, Google search, and your local REIA. Get on their Buyer's List.
4. Be A Contrarian, Buy Like A Value Investor
Warren Buffett famously said "be fearful when others are greedy, and greedy when others are fearful". While housing prices have increased tremendously over the course of the pandemic, real estate is hyper local and certain markets have not experienced anywhere near as steep a rise in home prices. This is especially true of urban markets. While everyone is chasing suburban listings, smarter buyers are looking for opportunities in the areas buyers are fleeing.
Summary
Fight the FOMO (fear of missing out) and use the suggestions in this guide to buy smarter.
There's more to learn at OfferMarket. Feel free to reach out if you have any questions!