Posts Tagged ‘sellers market’
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).
Tuesday, May 27th, 2014
This is the number one question I get from buyers today…it is Spring/almost Summer, so why are there not more listings available? While I have blogged about this topic several times before, I thought I would discuss the main reason I believe we are not seeing more inventory in many areas right now, including here in San Diego and North San Diego.
There are many potential sellers out there – those who want to move up, downsize, change neighborhoods or move out of area. I know because I have spoken with people who have in the back of their minds that they can move and would like to, but for one reason: there is no inventory. This sounds like a cyclical argument, and it is, so let’s break it down to understand what is happening in many markets.
Sellers are typically not just sellers, they are buyers as well. When they sell their home, they most often need to purchase another replacement property. If the sellers live in an area where inventory is low, they know that while their home may sell quickly, they may have a hard time finding a home to purchase. Rather than step out into the deep unknown – facing the prospect of renting (which is also a difficult market in which to find a property) and moving twice, many sellers decide to just wait it out.
Despite the fact that historically speaking, it is never the best time to BOTH buy and sell, it is easy to see how the above viewpoint, which is completely understandable in today’s market, coupled with buyer competition, might make sellers wait to put out a For Sale sign.
The demand for homes in many areas is still high, and there are buyers waiting for properties to come onto the market, many who understand the need to be aggressive and jump high in order to beat out other interested parties (a topic for another blog). If the demand continues sellers may realize that taking a risk could be positive. If the sellers wait too long they may price themselves out of the market; in other words, if demand remains stable or grows, prices will likewise remain stable or rise. While this is great news for potential sellers, if they are going to be purchasers as well it could mean higher prices on that end.
The bottom line is that sellers need to feel comfortable that they will be able to purchase a home once their home has sold (if that is the plan). They need to do their research and be ready to make an offer when a home meeting their criteria comes up – all the more reason to list their homes now as we head into Summer. If flexibility is an option then it is a good idea to line up a back-up plan, such as a month to month or even weekly rental while the sellers/buyers find a home and close escrow. There are apartments that do rent on a weekly basis, and are available furnished, so that the sellers/buyers would not have to move twice.
Before jumping into the selling market, make sure to have a plan and discuss it with your real estate agent. If you align all the pieces correctly you can sell your home and find a new one in a difficult buyers’ market.
Monday, July 22nd, 2013
Many sellers have been questioning whether it is the ultimate time to list, since it has officially become a “seller’s market” in most California areas, including here in North San Diego. Some were able to take advantage of the crazy multiple-offer situations and buyers’ willingness to pay over appraisal value – situations that were seen often in many areas. According to many new reports and predictions those sellers may have jumped into the market at the right time…the rest of you, well, you may not be so lucky.
There are several factors that have been noted which could have an impact on housing prices going forward:
Rising interest rates. While many in the industry saw it as inevitable, it is now official that rates are rising. We have seen the average 30 year fixed rate rise a whole percent in a short period of time with some products, from 3.5 to 4.5%. While historically speaking this is still very low, many buyers are re-thinking plans to purchase, as higher rates mean affordability drops. Those who have been awaiting short sale confirmation from lenders are also in a similar boat – they are watching their monthly payments go up, unable to lock in their rates until the lenders approve their sales (and we know how ridiculously long that process can take – don’t get me started here on short sale lenders).
As rates continue to rise we will undoubtedly see some buyers changing plans to purchase, or changing ideal purchase scenarios (i.e. buying smaller homes instead). We will also see sellers changing tactics – some may decide to withhold from placing their properties on the market, while others may become nervous and quickly list their properties before the rates jump even higher…this could lead to an inventory increase, which also will effect the market.
Inventory growth. As everyone in the industry knows, inventory has been scarce in recent years; the bidding wars and drastic price gains are testament to this fact. But what happens if inventory finally starts to grow? First off, we will see a big leveling off in pricing – I think the days of outbidding and paying cash over appraisal value will be over. Market times will increase and buyers will have many more choices, should they decide to purchase despite higher interest rates ( and I think they will, as rates will likely climb higher with time, thus people will want to buy before they are priced out of the markets).
Stabilization of the housing market will be a good thing, and should be looked at as such. More inventory and higher rates will lead to a “normal” market, one that experiences a slow but steady growth over time, and keeps us out of bubble land.
These factors will NOT lead to a halt in housing recovery, but rather will sustain it. The skyrocketing prices have to end at some point, and prolonging them will only hurt the market. Sellers will still see gains on sales, but I think it will be more controlled and slow. What we are seeing is just another example of the government control of the housing market…and although it may seem frustrating to some, it will be positive for the market.
Monday, March 18th, 2013
If you are thinking of selling, refinancing, or just want to get an idea of what your home is worth, you have many options. Most people these days like to do things themselves, since there is so much information available at our fingertips online. There are also some great real estate sites and many local brokerage sites, so there are multiple ways to access the information. But you need to be careful, as what you get on some of those sites may be inaccurate, especially in today’s market.
Sites like Zillow and Trulia provide easy access to recent sales, and even provide estimates for the value of your home. Some things they may not take into consideration are:
1. The condition of your home and comparable sold properties
3. Additions – sometimes these take a long time to show up in the public records, which could alter the valuation of your home
4. Very recent sales (closed in the last few days)
5. Pending sales that are about to close escrow (as they will have an affect on your sales price should you decide to sell)
6. Whether or not your property is distressed or other recent sales were distressed
7. Inside knowledge about other homes that may have just gone into escrow or appraised
8. Other factors. There may be other factors that can affect your sales price, such as information displayed in the confidential remarks on sold properties (that only licensed agents can see) that provide details – for example, commissions may have been reduced, sellers may have reduced the sales price due to expensive necessary repairs, or other factors could have affected the sales price. Also, there may be information about construction in the surrounding area that can affect sales prices in the future (freeway extensions, plans for new shopping centers, Or there could be issues with the condition of the home that sold.
All of these details are important in analyzing your home and making sure you get the correct information. Thus it is very important that you consult a local area real estate broker or agent to provide you with a specific and detailed market analysis.
There are many things we can do ourselves these days online, but if you are considering selling make sure you get the right information so that you can make an informed decision. Real estate agents are there to help you, and I do not know of any who charge for a detailed market analysis. So find a skilled agent to assist you, and make sure you have all the pertinent information before making any major decisions.
Thursday, February 21st, 2013
Sellers rejoice: it is finally a sellers’ market in many areas. For those homeowners who need or want to sell, this news has been a long time coming, after the last few years of the housing market collapse and bad news. There are some very positive market conditions that accompany this changeover:
Home price increases: If you follow the housing market in your area you may have noticed that prices are increasing in most areas (of course, you should check with your local real estate professional, as every area is different). The median national home price has increased 12.3% in San Diego county from this time last year, according to the National Association of Realtors (NAR).
The great news is that this will move many homeowners from being underwater, to being able to finally sell and move on. Many of these people were “stuck” in their homes because they owed more than their homes were worth. Zillow reported that over 2 million homeowners came out of the negative equity doldrums on their homes in 2012, and that is expected to continue this year. Over the next year we will see many of these underwater homeowners get out of negative equity situations, which will then increase the inventory levels and bring the market back into “normal,” aka healthy, status.
Increase in buyer demand: Also, according to NAR, buyer traffic has increased 40% from a year ago. There are many buyers out there ready to buy, and less inventory for them to see. This keeps prices climbing and leads to…
Multiple offers: Many listings are obtaining multiple offers, and many are also selling not only over comparable market value, but over appraised value. Lots of buyers are willing to pay cash out of pocket for homes where their appraisal has come in too low (they pay the difference between the appraisal and the sales price), thus driving neighborhood comparables upwards.
Market times have decreased: Due to all the above factors, market times have decreased and homes are selling more quickly. In San Diego county, average market times decreased for almost every city. The average days on market in North San Diego for detached homes was 36, down from 48 days in December 2012. Market time for attached homes similarly fell in the majority of San Diego county cities, some as much as 84%, with the median attached home market time all across the county at 48. (Source: HomeDex)
The market is improving and all signs are pointing toward a healthy 2013 for the real estate market. The biggest plus is that we will eliminate the negative equity situation for many homeowners, creating more inventory for buyers, and allowing many current homeowners to sell and purchase properties that are more cost-efficient for them. All this, of course, will create higher home values, which benefit neighborhoods.
All in all, this is a great time to be in the position to sell, so get your home in tip-top shape and enjoy the turn of the market. If you are thinking of selling your home, it is important to consult with an experienced neighborhood real estate agent.