Why do buyers lose their minds in a hot Market?

It's interesting that buyers tend to absolutely lose their minds in a hot market. Making very aggressive offers, waving all sorts of contingencies, etc.

Real estate markets won't effectively go to zero. So if you're an individual that has decided you prefer home ownership over renting, why not get out there and get moving when the market's down 10, 15, 20% and everybody's telling you not to buy? No one can predict a top or a bottom, however, my preference is always to buy real estate in a falling market, if you have the opportunity.

I bought one house in Florida in 2011 when people were sending their keys back to the bank. Interestingly, I remember I was mostly bidding against investors, not primary homeowners at the time. They knew something civilians didn't. Wish I would have bought more than two. At the time most people in Florida and New York City were very bearish on real estate, not too many people were advocating purchasing a home in either New York or Florida (see Streeteasy threads for reference).

I think Miami, Palm Beach County or any hot suburb would be the last place I'd want to buy right now or over the previous 6 months.

The New York Times: Burned by Hot Housing Market, Some Buyers Back Off.
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
It's interesting that buyers tend to absolutely lose their minds in a hot market. Making very aggressive offers, waving all sorts of contingencies, etc.

Real estate markets won't effectively go to zero. So if you're an individual that has decided you prefer home ownership over renting, why not get out there and get moving when the market's down 10, 15, 20% and everybody's telling you not to buy? No one can predict a top or a bottom, however, my preference is always to buy real estate in a falling market, if you have the opportunity.

I bought one house in Florida in 2011 when people were sending their keys back to the bank. Interestingly, I remember I was mostly bidding against investors, not primary homeowners at the time. They knew something civilians didn't. Wish I would have bought more than two. At the time most people in Florida and New York City were very bearish on real estate, not too many people were advocating purchasing a home in either New York or Florida (see Streeteasy threads for reference).

I think Miami, Palm Beach County or any hot suburb would be the last place I'd want to buy right now or over the previous 6 months.

The New York Times: Burned by Hot Housing Market, Some Buyers Back Off.
Agreed. Whats not taken into account are humans and their situations, kids, the wife, hte husband, temp living in undesired quarters/location until home is found, etc..life hits you hard when a new home space is needed in times like these. I have spoken to a few friends in similar situations who have a real need to buy and explained the emotional toll they are living on a hourly/daily basis. This can def drive emotions/decisions
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Real Estate is the only thing no one wants to buy when it's on sale. On Black Friday they put big screen TVs on sale for 25% off and people have fist fights in the aisles.
But if Real Estate gets marked down like that no one wants to touch it.
humans and urgency are crazy things to watch when its in motion
 

David Goldsmith

All Powerful Moderator
Staff member

Pressure on home shoppers eases as bidding wars hit 2021 low​

Activity peaked in April when almost 75% of offers faced competing bids​

Home shoppers can take a breath: Competition for listings is lower than it has been at any point this year.
Last month, 58.8 percent of home offers written by Redfin agents dealt with competing bids, according to a market report from the company. That is the lowest since December 2020, when 53.7 percent of offers were in bidding wars.

The figure represents a massive drop from April, when 74.3 percent of offers drew bidding wars, a high point for the past year. It was also slightly lower than last August, when 59.4 percent of offers faced rival bids. Last month, the number was 62.1 percent.

Seasonal changes could be factoring into the cooling market. Fewer people tend to put in offers for homes at the beginning of the fall when the school year is kicking off and families are getting settled.

Prices are also beginning to show signs of stabilizing, despite a persistent gap between the supply and demand of new homes. The market hasn’t cooled off completely, but there are signs of intensity receding among buyers.
In some metropolitan areas, however, competition remains as fierce as ever. Raleigh, North Carolina, had the highest Redfin bidding war rate last month, at 86.7 percent. The San Francisco/San Jose metro was second at 70.7 percent. Both markets saw increases in the rate from July, although the Bay Area’s rate was lower than at this time last year.

In Los Angeles, the bidding war rate was 62.8 percent, down from 67.5 percent in July. New York City’s was 56.4 percent, up from 50 percent the previous month. The rate was 53.1 percent in Miami, also up from 50 percent. And Chicago’s bidding war rate was 45.5 percent, down from 52.9 percent.
Of the markets analyzed, the one with the lowest bidding war rate was Oklahoma City, at just 35.7 percent.
 
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