What has created this crazy Seller’s market?
What are the critical hurdles causing the low inventory of homes for sale?
Should I sell my home now, or wait for higher prices?
Never have I seen home Buyers in such a stressful market; a limited supply of homes to purchase; a Buyer pool that is more than three times the size of the homes on the market for sale; multiple purchase offers driving up prices; Buyers living in temporary housing as they continue to submit purchase offers with the hope of being the ‘winner’; and, much more! Buyers are in a state of fear that these market conditions are causing the price of homes to race beyond their grasp. And, they are fearful that at some point mortgage interest rates will begin to climb and they will have missed the opportunity to secure an interest rate of below 4%.
There are three critical hurdles that are in play in the Bay Area before this crazy market settles back down to an even playing field. What are the dynamics that are causing this market condition that we thought was only going to be a couple of months long? All across the San Francisco Bay Area home buyers are experiencing the same extreme stresses because of the record low number of houses for sale. And, many of them are making home purchases without much thought about over paying for a home.
Equity: Potential home sellers who want to move up or down-size do not yet have the equity in their home that will be needed for them to make their next home purchase. Because of today’s lending requirements it is typical that a home buyer needs at least a 20% down payment in order to qualify for a mortgage. And, even with the dramatic rise in Bay Area home values it still may take another year for home values to catch up with what is required for home buyer to make their next purchase.
Fear: Another factor we are noticing is that even if a potential move-up or down-sizing home buyer has enough equity in their home, they are reluctant to put it on the market because they will then become a ‘buyer’ and be in the same position as the current pool of buyers all fighting for the same homes. There are not many home buyers who want to experience two moves when they sell a home. With today’s market conditions there is a chance that a successful home seller will be in temporary housing while they find their next home.
Waiting: Many home sellers waiting on the sidelines convinced that home prices will continue to rise this year. These are the ones who will put their home on the market when rising home prices have reached a level that satisfies their expectations. The challenge with this thinking is that home values may not rise much more in the next few months. My 2013 housing market predictions stated that Bay Area home prices will rise about 12% this year. They have already exceeded that prediction. So, the home sellers that are waiting may end up on the market in the Summer when there is a flood of other homes for sale from the others that were also waiting for higher prices.
And, you don’t have to ever sell your home. If you love your neighborhood, and you have a stable career in the Bay Area what’s the hurry. There are many reasons why people sell their homes. However, no one sells their home if they don’t have to. It is a BIG job to sell a home, and there may be reasons to do so now.
But, if you would like to learn what your home is worth, we would be glad to provide a FREE price report. Contact us today to schedule a confidential appointment. So, what are you noticing in your local real estate market? Is it as crazy as I have described? Until next time… Jim Walberg