If you guessed California, you’re right. Texas always seems to be ranked number one or two as the most popular destination state for the California exodous and we’re seeing more Californians than ever making offers and buying our listings.
From what I understand, California home prices are surging as well, so it makes sense that relocated Californians are taking those profits to buy a home in Texas where they can easily get two to three times the home for their money. At least here in Collin County.
Although I’m generalizing, California buyers don’t appear to care whether the home they’re buying is priced in line with comparables or not. Many are all cash buyers and don’t even bother to order an appraisal. It’s hard for other buyers to compete with that attitude.
In years past, I had sellers say to me on listing appointments “I want to price my home way over market. I’ll just wait for a California buyer who will overpay for it”. I told them the California buyer was just a myth. I didn’t see multitudes of Californians making offers on our listings.
I also assumed those out of state buyers would be working with a local buyer agent who knew the market and would protect them from overpaying. But times have changed. There are two things impacting our market now we didn’t have in previous years, a severe lack of inventory and high demand all at once.
A couple of weeks ago I ran a report and noticed there were only four homes available in all of Fairview at any price and two of those were priced over $2 million. Even if an out of state buyer is working with a local agent, they have no leverage. There aren’t enough homes to play off each other to negotiate the price down.
Every time a home sells at a highly inflated price, it serves as another benchmark and agents, appraisers, and lenders alike will use it as a comparable. That’s why home prices just keep going up.
I’m thrilled for our seller clients because they’re getting top dollar for their homes, but I feel for the buyers we’re working with. They’re submitting what we consider to be great offers and well over the listed price but more often than not it still isn’t enough.
We don’t want to cost our buyers a sale, but at the same time we don’t want them overpaying just to get a home under contract. It’s definitely a difficult time to be a buyer agent.
Could it be this isn’t just a short term market blip? It’s an adjustment to prices which have been too low for too long
Although that’s hard for me to accept, I can’t rule it out. Maybe what we’re seeing now is the new norm and is here to stay.
Bottom line, either prices will start to fall across the board sometime in the future or they’re going to remain at these new elevated prices. Only time will tell and we’ll all find out together.
In my next blog post, I’ll be talking about how we’re pricing our listings these days.