I gathered my cell phone, notepad, and began formulating a plan to show properties to my clients. They are primarily interested in The Woodlands and Woodforest as they are after good schools, amenities, and the quality of life each community is known for. I mapped out our route and began reviewing the private agent notes in each of the listings…this should be fun.
“Showings to begin Saturday 4/2 from 9AM-5PM. Submit your best and highest offer by 4PM Sunday.” – This home was priced 20% below market to create a bidding war with multiple offers. My clients had zero interest in participating and declined to offer even though they liked the home very much.
“Showings will be limited to Saturday and Sunday from 12-5PM. Seller to review all offers by Wednesday.” – Very nice home and the seller made the decision on Monday. My clients submitted an over-asking price cash offer with a quick close. They didn’t receive a counteroffer from the seller. We were not surprised as I prepped them ahead of time regarding this very real possibility.
You get the idea. There were several other homes listed for sale that had similar instructions.
What is causing this ridiculous yet exuberant seller’s market?
Is it Covid? Yes. – Families continue to evaluate how they will live post-Covid.
Is it lumber? Yes. – The product is VERY volatile and prices continue to spike.
Is it a lack of inventory? Yes. – See each of the above and this item below.
Where is all of the new construction inventory? GREAT QUESTION. New home builders are cautious of committing too far into the future due to lumber and other typically static expenses behaving erratically. Currently, I am working with a custom builder as his representation and during conversations with the buyer, he indicated that normally he could commit to lumber prices in the future. However, today he cannot as the suppliers are honoring bids for much shorter durations than they would in a typical market. Therefore, he needs a lumber allowance for the job. These are the difficulties facing builders across all price points.
What is the end game? New home builders will eventually need to shelve the 2-3 sales per month per community cap that they have in place in many locations. I cannot imagine as a salesperson not being able to complete a purchase agreement with a willing and able buyer when I have a homesite available. However, that is the reality today with many production builders. Eventually, greed will start to win out and some of these builders will begin to have difficulty saying “no” to revenue. When that occurs is anyone’s guess. And until it does, assuming ceteris paribus, we are going to be in the trenches together for a long while.
How does one navigate this irrational market? My advice – patience is the key. Once you understand the type of game that is being played, you will be able to navigate the highs and lows with less emotion and anxiety. I also firmly believe that the right home for each family is out there. If something feels like it is being forced, it probably is. Trust your instincts as buyers, sellers, and agents.