■ By Matt McPherson / Columnist
The real estate market continues to boom into the holiday months, contradicting what many real estate agents are used to during this time of year. However, tight inventory and a continued rise in home prices are resulting in several negative trends in the current housing market, which are contributing to a surge in buyer’s remorse after escrow has closed.
Recently ValueInsured conducted a survey based on more than 1,000 responses from a quarterly report and what they found was a list of five trends that many feel will leave the housing market in a weaker position.
1. The “No Inspection” trend came in as the most popular with 58 percent of home buyers feeling remorseful for not conducting an inspection. Local inspectors such as Kelly Messick of Peace of Mind Home Inspections produce a thorough report, climbing through the attic and crawl spaces to get a detailed description of the structure, plumbing, and electrical. Any red flags discovered during the inspection can be addressed with the seller through escrow and many times can be resolved prior to its close. Make sure to have your inspection done as soon as possible after opening escrow within the 17-day due diligence period to avoid losing your deposit if you decide to back out. You can’t put a price on peace of mind when it comes to the function and integrity of the home.
2. Another very popular trend right now is the “offer sight unseen” trend coming in at 57 percent of buyers interviewed. The majority of these buyers are coming from out of state and submitting offers based on what they see on Zillow, Redfin, etc. Low inventory and frustration is causing many of these buyers to make immediate offers on properties they’ve only seen on a computer. If this is the case and you absolutely can’t physically view the property, ask your real estate agent to make a detailed video walk-through, turning on all the faucets and light switches throughout the property. In addition, make sure to get a property inspection, which will provide a detailed report on the condition and functionality of the home.
3. The “co-buying with strangers” trend is on the rise coming in at 57 percent. With all the DIY and flip reality shows on TV, everyone has become a self-proclaimed expert in the real estate market. Online investments sites and high-risk financing has emerged as a tool for those looking to buy, fix-up, and flip fast in this market that continues to surge. This thought process commonly results in shattered partnerships and many times ends up in court, with both sides pleading their best of intentions. The best way to destroy a friendship is to go into business together. If you can’t invest on your own, it is highly advisable to wait until you can.
4. A popular investment approach in the San Jacinto Valley is the “cashing out from retirement strategy” trend coming in at 37 percent of current buyers. Many people are deceived by the enticement of a quick return on their investment and are willing to tap into a retirement fund that probably took decades to amass. Very rarely do these impulsive purchases result in a better return on the retirement fund than if they were just left alone to accrue interest on their own. Again the public has been pre-programmed by the countless reality flip television shows into thinking the process is easier than it looks and in many cases results in a loss.
5. Lastly the “tiny home” trend has become very popular throughout California, coming in at 36 percent. The allure of preserving a great location with a smaller footprint has many people opting to downsize. Low maintenance, less costly utility bills and reduced property taxes are very attractive, but unless you decide to continue to downsize, it just doesn’t make sense. People naturally amass wealth and possessions, and families grow. Those living alone tend to do better in tiny homes, but symptoms of claustrophobia often set in and one becomes stuck with an irreversible decision. If you do plan on buying a tiny home, it’s highly advisable to consider your living conditions and who you’ll be living with. Such close quarters can result in broken friendships and divorce.
These trends are just a few of the many situations emerging from such a competitive real estate market and should be avoided if at all possible. It’s imperative to have a home inspection done when purchasing a property, especially if you are buying a property that you have not personally toured. A few hundred dollars that the inspection costs can prevent thousands of dollars in repairs and maintenance down the road. Again I can’t emphasize enough the importance of contacting a local realtor experienced and familiar with the local market you’re looking to buy in.
Matt McPherson is a licensed real estate agent with Coldwell Banker Associated Brokers, BRE # 01362837. Reach him at 951-315-7914 or McPhtown@aol.com.