What goes up…continues to go up—at least when it comes to the real estate market these days. We are seeing demand increasing and supply often lagging in a lot of places, especially in strong markets like San Francisco and Houston. As you scour through listing after listing you should not be surprised to find that your dollar may not go as far as you would like it to these days. While sellers are striking while the proverbial iron is hot, buyers almost everywhere are looking for relief from the heat. So is there relief? Most likely yes, and though it might be finding a needle in a haystack, the right microscope—and patience—will help you uncover a real steal in this booming market.
Boom, there goes your wallet
So how hot is TOO hot? Well, depending on where you are looking to buy, you could be seeing about a 6.5% increase from last year’s prices. That is just the average increase in property prices—some cities are seeing even higher than that and it really is affecting buying behavior everywhere. For example, the Houston and Dallas/Fort Worth markets have typically seen strong, but affordable growth; however, for the first time in recent months we are seeing first-time home ownership getting harder and harder. Alternately, the San Francisco Bay Area market continues its march upward and almost in line with New York City for highest price per square foot.
So where are the deals?
A “deal” is different for each buyer. Whether you’re open to purchasing a fixer-upper, or you buy in an up-and-coming neighborhood, a deal is really about the value of the property for your dollar.
Fixer-uppers are a great option for those who want move-in-ready, but have the patience and flexibility to create move-in-ready. Fixer uppers are great in that they allow buyers to get creative literally and figuratively. There are great opportunities to save dollars and still get the look you want by doing small things like installing laminate floors versus hardwood, or getting a “new” kitchen by simply re-facing existing cabinets. If you are a more adventurous type, fixer-uppers can get as nitty-gritty as taking the property down to the bones—moving walls, installing new bathrooms where closets once were, or building a kitchen island. These kind of deals are also great because they sometimes mean moving into a desirable block or neighborhood. Just because your property might initially be the ugly duckling, buyers can often turn that duckling into a beautiful swan that both benefits your wallet and makes you the new favorite neighbor—they will appreciate your home’s “new do” as the increase in the value of your home post-renovation means an increase in the perceived and real value of the rest of the neighborhood’s properties.
Speaking of neighborhoods, if your parameters are more flexible you can also find a deal in “up-and-coming neighborhoods.” Places like San Francisco are seeing a lot of previously undesirable locales becoming rejuvenated by new-construction, gentrification projects, trendy retail openings, refreshing business growth, and hip restaurants. Places like the Dogpatch, SoMa, and The Mission are demonstrative of this change. Buyers looking to purchase real estate in the city may find it too rich for their blood, but if you look hard enough—or more appropriately put, in the right place—you just might find a gem. Even with median sales prices near a million dollars for a single-family home. Neighborhoods like Excelsior and Visitacion Valley are going for well under that.
In Houston where the real estate market is getting too hot for first time buyers, knowing where to look for the deals is also key. Glenbrook Valley—where mid-century homes are the norm but adequate preservation has kept them fresh—is a great example of this. While other neighborhoods and surrounding suburbs of Houston are reflecting the tight supply and high demand environment, surprisingly Glenbrook Valley is still a well-kept secret: median home prices are still hanging around the $100,000s range! Well, maybe it won’t be a secret anymore, but now you’ve been clued in!
Not even the largest magnifying glass replaces a good agent
So cat is out of the bag and now everyone is headed for their hundred-thousand-something dollar home in Glenbrook Valley. Don’t you wish you knew about it beforehand? Well you could have through the diligent work of the right Realtor. Whether you are in the market for something vintage (not dilapidated), needing TLC, or a move-in-ready deal in an up-and-coming neighborhood, a seasoned Realtor can point you in the right direction. This is especially true for first-time homeowners-to-be. An agent will know the right questions to ask and be able to synthesize that into set of applicable listings. Your Realtor can also make sure that you are well educated on the neighborhoods you are considering and steer you clear of properties that could be a real buzz-kill when you unwrap the “deal” and see all the hidden unknowns.
Even in a booming market like today, a needle in the haystack isn’t impossible to find, you just got to have a bigger magnifying glass—or a better Realtor in this case—than the next guy!