It might seem like a simple business practice, but high demand and low inventory can lead to prices for any particular product to increase.
Right now this is happening to the housing market in the area. Low inventory is leading buyers to have to go in on homes above the asking price to ensure that they even have a chance of securing a home.
According to multiple realtors, they are seeing a lot more cash offers take place in the current market. Andrew Schweihs of AJS Real Estate said that he is even seeing buyers void contingencies on such things as home inspections, which was once unheard of.
Schweihs wasn’t the only realtor who mentioned this. Albert DiVirgilio from Re/Max said that he has seen everything at this point.
“Anything and everything is on the table,” he said. “Buyers are guaranteeing their offer so basically they are stating that they will fill the gap on appraisal, if there is one (a gap), which has driven the numbers up.”
DiVirgilio explained that this can drive the prices of surrounding homes as well. He said that this is part of the reason that the housing market continues to go up.
Schweihs works on the North Shore, in areas including Marblehead, Salem, Saugus and Swampscott. He said that for the past 6-8 months it has been a “crazy” seller’s market and that he has buyers being forced to offer anywhere from 10-20 percent above the asking price.
Joan Regan, who works for Century 21 in Lynn, also described the market as “wild” in the city. Regan mentioned that she has seen offers between $50,000-$75,000 over the asking price.
Similar to other realtors that The Item spoke to, Regan mentioned that she is seeing buyers waive home inspections and that some buyers end up regretting that decision. She also added that if she had a buyer, she wouldn’t encourage them to do that.
With memories of the 2008 housing market crisis, some realtors do have that crash in the back of their heads.
“It’s something that all of us realtors think about,” said Robin Murphy of Re/Max in Peabody. “‘Where is the market headed? Can it continue to climb and sustain? Are we headed for another crash like the one that started in 2007/2008?’ There are a lot of factors that created that crash that we don’t have happening in today’s market, primarily the changes in mortgage lending rules. The experts in the industry tell us that we won’t see a real estate crash like the last one and I tend to agree with that. It all comes down to supply and demand.”
There are some realtors who are hopeful, for a variety of different reasons, that buyers won’t again witness what they saw in 2008.
“It’s possible but I think there was a lot more going into the collapse of 2008 with mortgage brokers that were doing things that they shouldn’t have been doing and giving people approvals on loans that they really had no business getting approval on,” said Schweihs. “A lot of those practices are not happening now.”
DiVirgilio also mentioned that he doesn’t see this being a bubble like in 2008.
“Boston has been doing this for a while,” he explained. “When Boston expanded their international runway years ago, that’s an indicator of what’s to come. When we became an international gateway now for flights to come all the way direct from Asia and Europe, we all of a sudden became a hub or a gateway for international businesses, and as they move into Boston and they bring jobs and property, that’s going to drive our values up all around the towns as far out as New Hampshire now.”
With how intense the housing market continues to be, multiple industry professionals said that now more than ever it’s important to have an experienced realtor who knows what they are doing.
