The housing market in the Bay area has taken the path down insanity ! After a seriously depressed housing market, we have jumped straight to a sellers market. This is great news for sellers but I honestly believe the people making the most of this is the new home builders. New Home construction in the cities of Dublin and San Ramon are the only ones with the inventory and I sincerely feel that the builders are up to their old tactics once again.
Releasing a trickle of homes, keeping buyers hanging by the thread is a marketing strategy that is working to their benefit but should anyone believe that the builders cannot release more homes? That is utter nonsense !! Large builders are making buyers believe that they can only release 6 homes in a month, that buyers have to drop their names on a lottery list, or be on a priority list that no one knows how many people are on the list.
How can any one, in their right mind, justify a price increase of $100,000 in a span of 4 months on the same floor plan? Resale homes don’t see that kind of appreciation !! I just wrote an unsuccessful attempt at getting a buyer a house in Walnut creek. That home sold for $1.25Million in 2007 and was on the market for $859,000. Despite an overbid, we lost but still no one bid even close to what the home sold at the height of the market in 2005-2007. So how can new home builders justify these astronomical price hikes?
Do buyers have short term memories? The same buyers who were out to get home sellers in the housing recession suddenly are willing to overbid on homes now. Here are some examples of craziness that is not visible to consumers on the public MLS sites
The demand is justifiable but there has to be moderate gains for this seller’s market to sustain. The greedy are heading for a fall again and that applies to new home builders. Equity sellers are seeing gains which are getting pushed higher by buyers not by sellers. Because equity sellers have to be cognizant of the fact that appraisals can be major hurdles in the path of substantial gains. How the builders are pulling off appraisals on rapid price inflation is a matter of dubiousness to me. How are the appraisers letting the builders get away whereas residential sellers do not? If, for any reason the market starts to stutter again, the reckless builders will once again be the cause of the prices to come down and the ones to suffer once again will be home sellers who do not have the deep pockets of the builders….. Food for thought !