Archive for the ‘seller’s market’ Category

Home Seller Dilemma: Sell Now or Wait Until Spring?

Monday, January 29th, 2018

A lot of homeowners have been wondering whether to sell now or wait until Spring. While Spring and early summer are typically the best times to sell, when a large majority of buyers are searching for homes, this year there is no reason to wait if you are a seller…and here is why:

Low Inventory – although picking up in some places, housing inventory is still low. The last year has been challenging for those who are ready, willing and able to buy, since they are unable to find homes that meet their needs or desires. This puts sellers in a great position while it is still a seller’s market.

Mortgage rates will continue to rise – rates have risen once already and will likely do so twice more this year. Combined with low inventory this double whammy will effect homebuyers, effecting their purchasing power and pricing some out of certain markets. If inventory picks up and the rates rise it will start to shift to a buyer’s market, and prices could come down in the long run.

Here is an example I read on a lender’s blog: If rates increase by 1%, from 4% to 5%, a buyer will lose 10% in purchasing power. This means that if a buyer can afford to purchase a $600k home today, but rates increase by 1%, she will only afford $540k using the same monthly payment.

Borrowing is still cheap – from a historical perspective it is still inexpensive to borrow money.

Prices will likely continue to rise – most economists and those who watch the real estate market predict that despite rate increases, prices will continue to rise in 2018. In the last year prices in San Diego County increased 9.1% – this was higher than the yearly increase of 4.2% in 2016. Again, this could impact homebuyers in many areas of the county.

New tax laws will likely effect high-end borrowers – those who are obtaining loans for high end properties will be effected from a tax perspective, as the new laws cap the mortgage interest deduction and the ability to deduct state and local taxes. Therefore the higher end market will be impacted this year, but we will have to wait and see the extent.

Based on the above it is an ideal time to sell. There is a great demand out there – I get emails from agents every week asking about whether I have any upcoming listings in certain neighborhoods. Many homes are selling before they even hit the MLS, and many agents are choosing to put their listings on sites other than the MLS first, in order to try to represent both parties in the sale (so some buyers may not even be aware of listings in neighborhoods they like).

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Is the Seller’s Market Winding Down?

Wednesday, June 28th, 2017

As those who watch the real estate market know, here in Southern California it has been a bit crazy over the last year or so. Despite some reports to the contrary it has been a seller’s market, especially here in San Diego County. That means that prices have risen and it has basically been a great time to be a seller. Low inventory and high demand give sellers an advantage.

BUT, there are some signs that the market may be changing. Let’s have a look at how:

1. Buyers getting priced out of the market. Many buyers cannot afford to live in areas in which they were able to afford a short time ago – in some markets just a year or less! With the choice of moving to completely different areas some are deciding to rent in their preferred areas instead, hoping that prices will drop down the road.

2. Interest rates rising. The interest rates have risen a few times and then dropped. The Feds are trying to sustain the market by making home sales more desirable, but buyers still have to deal with the higher prices and, in many cases, multiple offer situations that raise them even higher.

3. Buyers getting frustrated and putting searches on hold (many opting to rent instead). Many buyers are tiring of the raise in prices. I just showed a condo to buyers (second home purchase) that is priced over $100,000 higher than the model match that sold in January – this is crazy!! I have had several buyers tell me they are just going to wait it out, as they do not want to pay “ridiculous” prices for homes.

4. Home sales are slowing down. May was the third straight month for declines in home sales. Sales listings dropped 8.4% over the last 12 months, due to higher prices and fewer options for buyers.

5. Summer selling season won’t last long. The “hot” selling season that is summer won’t last forever, and many buyers with families want to get into a new home before schools start up again in late August/early September. Those who cannot find homes will be forced to rent, which could take them out of the market for likely a full year, possibly longer. Also, many out of area buyers – a larger percentage here in San Diego which come from tourists – may not be able to find anything to purchase due to low inventory, which means they will be going back home empty-handed. Many of these buyers typically become second home or investment buyers and tend to focus on condos and lower priced homes.

It is evident that the market is causing issues among buyers, and the solution is to inundate the market with more listings. But until the sellers feel they can find replacement property many are electing to stay in their homes, creating a vicious cycle that had no clear end. Ironically, this is typically the best time to sell, so those who want to take advantage of the great seller’s market will need to take a risk and have a Plan B (such as renting in the interim).

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