February 2nd 2008
Sellers Need To Become Buyers NOW!
Since East Bay real estate is currently a Buyers market, become one NOW!
Here we are in the first week of February and there are still Sellers who are living in “pretend” that there has not been a price correction in the East Bay real estate market place. The price correction obviously varies from the Berkley side of the hills, Orinda to Pleasanton, central Contra Costa, southern Alameda county, and East county region. No matter what region it is, Buyers are the ones running the show this month. So, Sellers, pay attention! You need to become a Buyer ASAP! As long as you hang out as a Seller you will not be having the opportunities Buyers have today - unbelievable mortgage rates, a selection of great homes from which to chose, and awesome values!
Here is the dynamic that Sellers need to consider. In the hyper-appreciating market of 2003 to 2005, it was a Sellers market, and new price highs were set each month in almost all of East Bay real estate. The Sellers were “going to the bank”, however, once they sold their home, becoming a Buyer did not allow them the same advantages of being a Seller. Why? Because the price of the next home they were purchasing in the East Bay just appreciated another 2.5% since they sold their home. So, the Seller who just became a Buyer was now chasing a hyper-appreciating market and needed to pay top dollar for their next home, and typically they were in multiple offers with other very competitive Buyers who wanted the same home.
So, here we are today. The reason a Seller needs to become a Buyer immediately is because of the complete opposite market dynamic in the East Bay real estate environment. The Seller may not be happy about their eventual selling price, but once they get over current market realities, they will be in the drivers seat of this market as a Buyer. It is not a market that is hyper-appreciating. It is a market that has had over 18 months of price corrections, interest rates are at a three to four year low, and the government is working hard to create the needed mortgage money and debt assistance extremely favorable to California Buyers.
And, when I hear Buyers talking about waiting on their next purchases, “… until the market hits bottom”, my question back to them is, “What information sources are you using to determine when the market will hit bottom?” Almost 100% of the time they say they are using newspapers and the media to make that determination. You must be kidding! Remember, if it “bleeds it reads”! Here is the latest snap shot from DataQuick for January 2008, that provides the real stats on what is happening in each local real estate market;
- Current months of inventory are down 25% in most East Bay real estate markets compared to thirty days ago! This is a HUGE shift!
- The mini-markets continue with large variations between cities, with the San Ramon Valley at 7.04 months of inventory, and Lamorinda at 6.95 months of inventory. ( Months of inventory means how long would it take to sell the current number of homes for sale in a given city if no more listings came on the market.)
- Overall, for the twenty-six communities in the East Bay, there is 10.33 months of inventory which indicates it is still a very strong Buyer’s market, BUT it is starting to shift!
One other indicator to watch closely today is interest rates. As mortgage rates decline you will see an increase in sales, which will begin to stabilize home prices, which will begin a slow shift to a level playing field for both Buyers and Sellers. The window of opportunity for Buyers is starting to close before your very eyes. So, Sellers, become a Buyer ASAP and enjoy the buying experience of the current East Bay real estate markets. Until next time…your real estate and lifestyle detective remains on duty. I always welcome your comments and perspectives.
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