I talk to agents all over the country and it’s interesting to learn what is going on in other markets. For example, one of my Florida friends told me that she received a low offer on a property that the buyer tried to justify by saying there was an “impending recession”.
My take on this is that it depends on which news station you watch and where you live. My Texas clients, for example, think that things just keep getting better and better.
Of course, no one wants to be “that person” who buys at the top of the market and the more people hear that a “recession is coming”, the more they let fear drive their decisions.
Here are some actual comments from agents on a real estate forum:
“I had a seriously interested buyer back off from making an offer due to recession fears.”
“I have some buyers right now that have decided to wait and see what the next few months hold, thinking that prices will drop along with interest rates.”
Since the Park City market has appreciated every year for the last 10 years, the people I spoke with 5 years ago about buying a second home are now completely priced out of the market. Those people let their fears keep them from making what could have been one of the best investments of their lives.
When my buyers ask me about the market, I respond with my experience selling real estate during the real estate downturn. This is common sense, but sometimes people need to hear it repeated: If you don’t have to sell during the bottom of the market, you will be ok. This means, don’t buy something you can’t afford. Don’t get over leveraged. It’s ok to be conservative.
Now, what if you are a seller? How does the current buyer psychology impact you? Buyers are looking to pay market value for a home. They are not looking to pay a seller fantasy value that the home is worth 20% more than the last sale, even if current inventory is scarce. Appraisers will look to the past and if a sale does not make sense based on the most recent comparable sales, the property will not appraise.
I’m not an economist and I don’t know if there will be an economic downturn. However, I do know that If you are considering buying a primary or second home in Park City, then you should buy now so you can enjoy now. As long as you are not forced to sell in a down market, you are going to be fine.