This is why the Massachusetts real estate market won’t be back to normal for a long time.
Last week I got a letter in the mail.
Like you, I’m surprised this still exists as a practice but desperate times call for desperate measures:
Now I would like to think our house is just that beautiful, but I don’t think we’re the only ones who received a letter from this Realtor. I’m sure there were many houses in multiple neighborhoods that got the same thing.
I showed my wife this letter and joked we should ask for a 20% premium over the current value. It’s a big round number but it’s essentially useless.
Why?
Even if we were able to secure a much higher selling price, it wouldn’t really help us all that much.
We already have a 3% mortgage rate locked in. We have a decent chunk of equity in the home. And as our desperate Realtor alluded in their letter, it would be nearly impossible to find another house right now to buy.
The combination of rising home prices, low mortgage rates that are locked in by current homeowners and low supply makes it unappealing to sell your house and look for another one right now.
Mike Simonsen from Altos Research has a chart that shows just how dire the housing supply situation is right now:
That’s 271,913 homes for sale in the entire country right now!
We’re in a housing market where we have record high demand and record low supply. If you want to know why prices are 20% higher than they were a year ago this is the simplest explanation.
But there’s more going on here.
Simonsen was recently on the Odd Lots podcast with Tracy Alloway and Joe Weisenthal where he explained how many homeowners are doubling up on their real-estate investments:
It’s like a doubling up. The homeowner goes to buy the next home, move up or move down. And because mortgages are so cheap, it’s a really good time to keep the first one as a rental unit. And so each year I go to buy a next one and I keep my…