Let’s face it… following real estate news can be intimidating. The media is always talking about the issues of inventory, affordability and of course… the ‘bubble or no bubble’ debate! Since my personal and professional mission is to keep you informed with real data and without scare tactics, this month’s blog summarizes where we have been and where we are going with regards to our local housing market.
Most of you have been more than aware that home prices have been on the rise since the mortgage meltdown of 2008. In recent years, Silicon Valley home sellers experienced the joys of receiving multiple offers as home buyers aggressively competed to outbid each other. Cash buyers were at the ready with their proof of funds to beat out all other offers that had loan contingencies. Housing starts were on the rise and mortgage lenders began raising interest rates.
Over the last few months, however, there has been a noticeable change in the market, leading many to ask, “What is going on with the real estate market?”. Sellers began to wonder if they had missed their window of opportunity… and buyers wondered if they should still pursue their dreams of homeownership.
It’s true that cash buyers are no longer the first or highest offers, lining up to secure the most desirable homes. And yes, there are some neighborhoods that are experiencing longer days on market, price reductions and fewer showings. More noticeably, Realtors® are seeing fewer buyers stopping in at open houses. All signs do indicate a smooth and steady transition from the expansion phase
to a contraction phase
… but that is not a ‘bad’ thing.
With new home construction steering into high gear, many home buyers are finding they have more choices of where they want to live, how far their commute will be and what type of lifestyle the new neighborhood may offer. Buyers (at last!) have the option of a shiny new home or a partially remodeled older home. The influx of newly constructed homes may be one key reason why the resale market is experiencing a slowdown.
This does NOT mean that the market is crashing (please don’t panic!), it just means that more home buyer needs are being met. This will, of course, lead to a stable market where home prices are no longer jumping through the roof, new construction starts will ease and housing inventory will become more stable. That is, until there is another market adjustment.
This transition is not a roadblock for sellers, at least not yet. The Bay Area still ranks #1 across the nation in terms of homeowner return on investment, and moderating price points make moving up more attainable.
If you have questions about the real estate market or want to know how much your home is worth, please contact me at firstname.lastname@example.org
. The current market transition offers distinct advantages for both buyers and sellers; let’s put them to work for you!