Spring and summer are typically hot real estate buying seasons. This year I’ve seen indications of an early start. Often market stats are lagging signals and don’t provide the best picture for buyers or sellers. I’ll share what I’m seeing, reports I’ve read, and what I anticipate in the coming months.
Busy Home Inspectors
In my years of experience, I’ve found that if home inspectors are super busy, we’re about to see an influx of new inventory. The best way to prepare a home for sale is to get all the disclosure documentation ready. One of the first steps in this process is to order a home inspection report and have it ready before officially listing a home on the MLS and advertising an open house. Therefore, one of the first indicators for me is how easy or difficult it is to schedule an inspection.
Buyer Choices & Optimism
Typically each spring we see an increase in inventory; this is absolutely normal. Sellers have been preparing their properties over the holidays and winter months. What we are seeing are inventory levels that are above last year. Comparing inventory today relative to 52 weeks ago, it’s up 187%. In my direct experience, I’m not seeing one specific reason for this increase. Life happens, including divorce, relocations, or accommodating multiple generations under one roof.
With more available homes on the market, buyers have more choices. That’s good news for buyers who have previously competed in multiple offers and lost. However, it’s important to keep in mind that inventory is still low compared to other parts of the country and there’s pent up need for housing.
Homebuyers are more optimistic going into the spring home-buying season, according to a Fannie Mae report. There was an uptick in Fannie’s Mae’s Home Purchase Sentiment Index. “Complementing that rise, more consumers said they now expect interest rates to fall within the next 12 months.”
In an April National Association Realtor article, the number of buyers with the winning bid on their first home has increased. The greatest year-over-year increase in the number of accepted bids by first-time home buyers was seen in San Jose, Seattle, and San Diego.
Resetting the Seller’s Mindset
With the shift in inventory, the San Francisco Bay Area real estate market’s frenetic nature of years past is giving way to a more balanced state. To date, I’ve still been able to sell homes quickly and above the asking price. Even so, there are many factors to consider:
- Updated & Show Condition. Homes that are updated and in excellent condition fare best. If a home isn’t “turnkey” then there’s a definite trade off on the price. The SF Bay Area is full of buyers who are busy professionals who don’t have the time, inclination or interest in managing home improvement projects.
- Aggressive Pricing. Current inventory is littered with price reductions. I suspect this is mainly because sellers had unrealistic expectations and/or the list price wasn’t based on solid research. Comparing the first quarter of 2018 to the first quarter of 2019, we are seeing an 8-10% reduction in many cities. However, there are some exceptions. In my opinion, you can’t underprice a house. Market pressures from prospective home buyers will push up the asking price to its actual market value.
- Internet Exposure. According to the National Association of Realtors, the typical home buyer uses their mobile device to search for properties online. In 2018, 93% of buyers used an online source during their home search. That’s why my marketing strategies maximize internet exposure for my clients. There’s an art to pricing a home so they are seen by the most qualified home buyers.
Sereno Group Analysis
According to a recent report from Sereno Group analysts, most Santa Clara County median prices peaked in March or April 2018. Available inventory increased for the remainder of the year. Sereno Group analysts believe a “correction” has already occured and residential prices have stabilized. In a recent Sereno Group meeting, they cited these reasons:
- Job creation in the Bay Area remained strong.
- Statistically Santa Clara County tops the nation’s regions with a housing shortage.
- Sought after properties continue to be competitively priced, and are located in the most desirable areas with the best schools.
Buying or Selling Remains a Personal Decision
Whether you’re looking to buy or sell, you need an experienced guide in this complex and multi-faceted real estate market. I’ve helped hundreds of individuals just like you successfully negotiate the most important financial transaction you’ll ever make. Contact me today to get started.