Why do buyer/seller interactions get so heated? Is home affordability really dropping in the Capital Region? I’ll answer both questions today.
Summer has officially arrived, and we’re now past the spring market. Even though everyone is probably making the most of their summer plans at this point, we can see that the market is still very, very active.
Today I want to touch on two important topics: buyer and seller interactions, and home affordability in the Capital Region.
First, my team so far has put 64 homes under contract, and for each transaction, there’s a buyer and a seller on each side. I’ve noticed that there’s often a sort of cat-and-mouse game going on between the two parties where the sellers think the buyers are jerks and the buyers think the same of the sellers.
Here’s what everyone needs to understand: The buyer wants to get the lowest price for the home they want, and the seller wants to get the highest price for the home they’re selling. Those are natural desires, and it doesn’t make either party ‘jerks.’
I have plenty of clients who have serious issues going on in their own lives, like divorce, medical issues, or sick family members. The stress of dealing with these problems sometimes leaks into the buyer/seller negotiations, creating a contentious atmosphere. It’s important to take a breath and step back from the situation: My goal is to bring both parties together in a meeting of the minds so that we can have a reasonable and fair transaction.
And for my second topic, Realtor.com recently released an article in which they named Albany the best buyer’s market in the Capital Region. A week later, the Times Union put out an article saying that home prices have been far outpacing income growth in the Capital Region over the last 20 years.
Here’s something to think about with regard to these articles: Understand that Realtor.com is focused solely on real estate, but the writer of the Times Union article writes about all different topics on a deadline. That means that they can sometimes miss the mark, which I believe they did here.
Sure, home prices have grown at a much higher pace than income growth in our area, but what the article failed to mention were the interest rates from 20 years ago. In the year 2000, interest rates were at 8.25%, but right now, rates are under 4% and we currently have 15-year mortgages for under 3%.
So, if you want to buy a home, now is a great time to do it. Interest rates are super low, and when you factor in the mortgage rate reduction over the last 20 years, home affordability has actually increased, despite the Times Union article suggesting otherwise. Mind you, if rates go up, our position may change, but that’s speculation at this point.
If you’re making the median income in the Capital Region and you’re shopping in the median price range (around $200,000), you’ll spend about 19% of your income to buy a home. Now compare that to 20 years ago, when you’d spend about 24% of your income buying the same home!
Ultimately, the point is that you shouldn’t believe everything you read in the media about the real estate market. If you have any questions about what’s actually going on in the market, give my team a call. We’re the experts and we’d be glad to help you.