More 2021 Speculation

I’ll probably be on a blog rant for a few weeks until I can get my head around this sharp market turn. Since my last post about the craziness, I’m still losing offers to the tune of 20k+ over list price multiple times a week. I’ve started doing some polling to get a little deeper into the data though. In these bidding wars of nearly 30 offers or more, the seller agents have been telling me that 60-70% of all offers are being brought by investors (not owner-occupants). Such a high percentage is troubling because in any market where speculators outnumber actual users of a product, things can get out of hand. When things are commoditized, then things like bags of wheat can end up passing through traders’ hands more than it does the hands of bakers. Prices driven by speculators instead of economic fundamentals is problematic in my opinion, and can lead to eventual bubble formation. Granted, we have a SEVERE lack of inventory even without the Silicon Valley crew descending here to invest, so outsiders are not the only driver of the market here. If owner-occupants were the primary source of our appreciation here, that would be ok with me. That would be a market driven by REAL fundamentals — not enough supply for the real housing demand. It seems, however, that at least this month outside investors may be moving into the seat of primary driver of our market. I worry where this goes…