While spring is traditionally the busiest time for real estate sales, this summer could prove to be the hottest time for buying or selling a home, according to a real estate economist at Florida Atlantic University.
“From a buyer’s perspective you have more choice, but you’re also competing against far more buyers,” says Ken Johnson, Ph.D., a professor of finance and associate dean at FAU’s College of Business, who also has sold hundreds of homes as a real estate broker. “Sellers are also looking to sell over the summer, particularly if they have children and want to get a deal done before school starts again.”
U.S. new home sales posted their strongest month in more than eight years in April, while existing home sales rose for the second straight month, spurred by steady job growth and historically low interest rates. Johnson doesn’t see the strong demand for housing slowing anytime soon.
“In some cities, especially in the Midwest, prices have plenty of room to go up,” says Johnson, co-author of the quarterly Beracha, Hardin & Johnson Buy vs. Rent Index. “Real estate is still a really good buy in places like Cincinnati, Chicago and Cleveland.”
While he has some concern about some cities such as Dallas, Denver and Houston, where the real estate market has been particularly hot, Johnson doesn’t foresee a dramatic downturn in prices for most of the country. In South Florida, where Johnson lives, fundamental factors supporting the housing market such as rising personal incomes, appear to be strong.
However, prices are probably too high for those looking to buy real estate as an investment right now, especially in certain markets, said Johnson, noting the difficulty buyers will have in finding a good deal right now.
“In markets like South Florida, Seattle and Portland, you may find you’re going to start to see lower probabilities that you’ll be able to successfully market your property,” he says. “But while you may see extended marketing time and prices going flat, there’s no reason to believe there’s going to be a big dent in prices in these cities.”
Johnson urges buyers to get prequalified for a mortgage before they start shopping. He also discourages buyers from making the purchase contingent on the sale of their own home or asking to take possession of the home before closing. That’s a prescription for disaster, he said.
“Be up front. Disclose pertinent information,” he says. “Do not ask the seller to take on risk that might seem trivial to you. You have to think about the other party.”
Sellers should make themselves and their home available to be shown by real estate agents and make sure it’s as pristine as possible, Johnson said. Make necessary improvements such as new paint, fixtures and flooring. But don’t go too far, Johnson warned.
“Be careful,” he says. “What you think is a nice improvement is another man’s gold shag carpeting.”
For more information, visit www.fau.edu.