No Crystal Ball for Real Estate Agents to Answer Buyer Questions
Buyers are asking tough questions about the market that can stump agents.
Where are home prices headed? When will we see more listings? And what’s the deal with interest rates?
With the spring market just a few months away, buyers across Massachusetts have many questions for their real estate agents. Topping the list are worries about rising prices, scarce listings, and where interest rates are headed, according to a Massachusetts Association of Realtors survey.
However, these are also the toughest questions buyers can ask, because there are no definitive answers for these macro-economic trends.
“Do we have a crystal ball, are prices going to continue to appreciate?’’ said Ned Mahoney, a top Keller Williams agent in Needham.
The home price question can be particularly challenging, he added, because buyers aren’t just interested in the general drift of the market. As buyers get serious about a house, they may press him for answers on exactly what will happen with their home’s values over the next few years.
Even with rising prices, buyers are still haunted by the last real estate crash, and are wary of the possibility that another downturn could leave them underwater.
“There is still a sense that people want to make sure they are not overpaying,’’ Mahoney said. “The demand last year just spiked prices.’’
Rather than throwing numbers at a wall, Mahoney counters with the five-year rule. “It should be a five-year hold, at a minimum, or don’t buy it,’’ he said.
Coldwell Banker Gary Vrotsos, who works in the Cambridge and Somerville markets, said it would be a “misrepresentation’’ to offer some sort of price prediction or guarantee that a particular home will appreciate by a certain amount, even in a hot market like Cambridge.
Instead, he takes a different approach, noting that even in a worst case scenario where a particular condo fails to gain any value over the next few years, the buyer will still wind up better off financially by moving from renter to owner and being able to deduct their mortgage interest off their taxes.
Interest rates are another tricky subject. Some of the nation’s top economists have predicted for a couple years now that rates are headed up, only to see them go down.
Buyers are very aware of the current low interest rate environment – which can shave significant dollars off a mortgage payment – and see the current market as an opportunity to buy while the buying is good, Vrotsos said.
Inventory can be an easier question to answer. Yes, the number of homes and condos on the market has been scraping along at historic lows, but the market is also cyclical, with a typical bump in listings during the spring market.
Of course, there are also more buyers on the hunt, so if anything, the market becomes more competitive.
Colleen Scanlan, broker and owner of McCormack & Scanlan in Jamaica Plain, says some of her buyers are hoping to see a big improvement in the number of homes for sale this spring.
But her answer is definitely not what they want to hear.
“I keep telling my buyers not to expect any more inventory than we saw last year,’’ Scanlan said. “Everyone wants a single-family or multi-family, but that inventory barely exists.’’
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