Breakdown: Why the housing market favors buyers
I’ve had a lot of people ask me about what’s happening now with the housing market; as always, my reply is “it depends on where the house is located!”
There’s no doubt that the market has cooled a bit, this trend started after home prices peaked around April/May and has continued. The latest housing and economic forecast released by the California Association of REALTORS® indicates high home prices, eroding affordability, buyer fatigue, and the volatility of stocks are prompting buyers to wait in the sidelines. It’s a well known fact buyers feel confident buying when there’s a lot of interest, in other words, when there’s competition for a place a buyer has more confidence placing an offer; when a property is sitting buyers often have the perception that something is wrong and will hold back from placing an offer, even a low offer. In truth, when the market is slow is the best time for buyers to buy but the psychological factor often prevails; read the rest of the article here.
At present, in a lot of areas, the market is favoring buyers, giving them a chance to step in while previously they may have been holding back due to discouragement from multiple offer situations.
While the last quarter of the year is often a little slower than the high selling months earlier in the year, for buyers, this is the perfect time to purchase a home as market conditions are a little slower and sellers are willing to negotiate. For sellers, properties are still selling though list prices need to be more realistic and days on market (DOM) may be a little longer than those seen earlier in the year.
How do we know a market is cooling? The two main factors are list vs. sale price, and days on market–the former has been dropping while the latter has been increasing! For the first time in a long time, we are seeing price reductions. Let’s check out what’s been happening for days on market since May, basically there’s been an increase in days on market, which represents buying opportunities.
It’s interesting to note that for houses, Los Altos is the only city (I track) which shows a lower number of days on market for October (9 days) vs. May (12 days), all other cities show increased days on market with Los Gatos leading the way at 19 more days on the market compared to May.
Looking at condos and townhomes, Campbell has remained steady October compared to May with 9 days on market; with Menlo Park showing an increase of 23 days on market. It’s interesting to see that the City of Saratoga had no closed condo or townhome sales in the month of September. Looking at the information, you can see that on days on market have been increasing.
Our local real estate market is still healthy though a little more realistic. As we move into 2019 we should continue to see market stabilization; a lot depends on the elections, the economy, and interest rates.
Just the Facts Ma’am!
Covering Silicon Valley. All information from the Multiple Listing Service.
Want information for other areas? Comments? Questions? Send me a message, I’d love to hear from you!
