Is the market around us slowing down…or speeding up? Yes.

 

*DISCLOSURE* What I write below is based on my opinion of the market that I serve, the East Bay Area (Tri-Valley)

 

 

If you still read the paper like I do (or the online paper) you are constantly seeing reports on the housing market. Most of the headlines go as such:

“Low inventory causing home prices to skyrocket!”

“Is the “Bubble” about to burst?”

“Housing pressure continues.”

When we are constantly bombarded with headlines like this, it is hard not to worry. The problem with what is being reported is that it is always just a little behind what is actually happening in the market place.   Yes, the inventory is low and yes prices are still high, BUT, we have actually seen a little bit of slow down in general activity. Why is that? There are multiple reasons I assure you, and plenty that I haven’t thought of, but based on conversations with fellow agents and my own personal experiences, here are a few:

 

  1. Inventory is low. Yes I just said that again, the same thing that you’ve read over and over. Basic supply and demand, when supply is low, demand is high…Econ 101. So while these homes are moving fast, there just aren’t a lot moving at all, because there are none to move. Does that make sense? If I tell you that 30 homes sell in my neighborhood in July and then only 15 sell in August, did the market slow down? Your first instinct might be to say yes but really, if there were 30 homes available to sell in August, then we would’ve seen 30 homes sell. Alas, there were only 15 available to sell…so that’s how many sold. This lack of inventory has caused a general sense of slow down in agent activity.

 

  1. Buyers are timid. When I meet with potential buyers, or just friends in general, the first question is always “How is the market?” The very next questions are typically, “Are we are the top of the market?” or “When is the market going to go down?” Right now, the interest rates on home loans have dipped back down to the low 4’s for a conventional (30 year fixed) loan. Given these rates, you would think that buyers would still be ready to jump in, but they aren’t. Buyers are so afraid of buying at the top of the market and experiencing what happened in 2008…that they have a real fear and believe me, I get it.  My counter is always this; if you think you are going to live in the home for at least 5 years, you will be fine. Of course this isn’t a guarantee but even after 2008…the prices around us (*see disclosure at beginning of article) were back up to their previous levels by 2013-14 and in many cases, earlier than that. Low inventory usually causes a larger buyer pool but the fears of a bubble burst have tempered that pool just a bit.

 

  1. Buyers are tired. When you’ve made an offer on 10 different homes and keep getting beaten out, it’s understandable to want to take a break for a little bit. I’ve seen and heard of this happening more recently with frustrated buyers.

 

  1. Time of the year. This one is a little harder to explain. September/October in the East Bay is normally a wonderful time to buy/sell a home. Looking back at my personal numbers, some of my busiest months have been in the Fall, but this year as been different. We always see a little lull right around Labor Day when kids are getting back to school or going on final vacations. Then we see it snap back the first few weeks of September with a new batch of inventory and folks back out on the streets. I feel like the factors mentioned above are slowing the typical amount of business that we see this time of the year.

 

Given these reasons, the question is, “Is this a good time to buy/sell?” The answer is always, “What will work best for you?” If you are going to be uncomfortable with the fact that the market could go down in the next few years and can’t get over that hump…might not be a good time to buy. If you need to sell your home but don’t know where you’ll be able to rent or buy? Maybe you should hold tight. Buying and selling a home are huge personal commitments on both sides so it’s really up to you.

Looking at a market perspective though, yes it’s a good time to sell and yes it’s a good time to buy. You shouldn’t have a trouble selling your home for a great (fair market) price with inventory at these lows. If you are looking to buy something that you plan on staying in for a long time, yes, go ahead and buy. The historical data will show you that you are safe.

So yes, the market is still warm (high prices) and yes activity has slowed in general.

 

If you made it through this entire post, nice work! If you ever have any specific questions on real estate and the market, contact me any time at Conor@dunn-team.com

Want to know what your home is worth? Start HERE!

Have a great week!

Conor

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