As we hit the mid-point of our Fall market, we are seeing some shifts in the market that are especially apparent from the real estate trenches. The talk this Fall between agents and our clients is: what is going on with the market and has it finally shifted from the seller's market of 7+ years? Read on for our take.
The Fall market
After practicing real estate through multiple cycles, we can say that one of the interesting things about the real estate market is that when it shifts, it doesn't shift slowly. After a *very* competitive Spring, this Fall we have seen a market that is characterized by a sudden and noticeable softening as well as some inconsistencies. We are seeing homes that would have been receiving 5-10 offers get just 1 or 2 and properties that would have flown off the shelf 6 months ago not getting any offers at all. At the same time, we have still seen some properties hit the very high marks we've come to expect, particularly single family homes. We're seeing buyers being less willing to compromise and more apt to keep looking. We're seeing price reductions and longer days on market.
While some homes have closed, we are still in the middle of this transition and won't see real data until closer to the end of the year and much of our advice for buyers and sellers comes from being immersed in the market as it happens 'real time'. As the year progresses and more inventory comes on, we expect to see more price reductions of 'subpar' properties and a decent number of homes closing under what we might have expected.
What is causing this?
There are a few factors that we think are contributing. First, it is an election year and an important one. During the 2016 election we also saw this kind of pattern, leading to the same speculation about the market and then a big rebound when the election was over. But rising interest rates that are predicted to keep rising, a fall in the stock market and uncertainty about trade wars are also important factors, not to mention that we are 7+ years into a cycle of big gains.
What does this mean going forward?
Spring is when we typically tend to see the biggest gains each year and if our Spring 2019 season starts with a bang, this might be more of a 'blip' that we are experiencing. Something is happening now and the truth is that no one really knows what it means until the dust settles. The question on everyone's mind is: after 7+ years of a very strong seller's market, are we finally going to shift to something more balanced? Our gut tells us we might be heading that way. But with a very strong economy in the Bay area, we also don't think the sky is falling and that while we may be looking at a softening, we don't think we're looking at a crash, especially with Airbnb, Uber and Lyft all projected to go public in 2019, which will add an infusion of competitive cash buyers to the market.
What does it mean for YOU?
For buyers: we're finally seeing some choice and the best time to buy that we've seen in a long time. It's a great opportunity now to have some choice and one thing to caution against is 'waiting' too long. If you are getting a loan, rising interest rates will change your buying power, sometimes significantly, and no one knows how long any kind of flattening will last. Look for a home now that will be a great home for you as well as a solid investment and be willing to move on it and lock in still low interest rates for a home you'd like to be in for the next 5-7 years.
For sellers: Sellers should hold on to most (or all) of their gains, especially in the best neighborhoods but it's also important to be realistic about expectations. It's also *vital* to prepare your home properly for market and price it right to stand out. Our recommendation would be to *not* come on this Fall but wait until our Spring 2019 market (January/February) where we might see higher prices and probably not lower than right now. A note that if you are thinking of selling anytime soon, this Spring might be the best time to come on for the foreseeable future.
As always, if you have any questions or would like to talk in more detail about YOUR situation, feel free to reach out.