Last year, in 2013, more then half of the homes sold were on the market for 6 weeks or less. This was the shortest time on the market since 2005. One of the reasons why homes sold so quickly was due to lower then normal inventory levels. In this type of market, sellers are seeing more and more offers over the asking price. In 2013, 50% of the properties that sold last year, sold over the asking price. Most of the sales, almost all, had multiple offers to buy the property. When this happens, buyers have no choice but to participate in an auction type situation. The situation is changing and the inventory levels have increased, providing buyers with more choices. As prices increase, sellers are more willing to make a move.
This is still a good time to purchase a home. A couple of things to think about when buying a property, you might want to know how the neighborhood will fit in your lifestyle and since we are in a drought, how will the property help you conserve water.
Since the beginning of the year, there has been a shortage of homes for sale and thousands of buyers trying to take advantage of the lowest interest ever. This has caused a lot of heartache and disappointment when the buyers are making there best offer and finding out that there are 20 other buyers making an offer as well. Buyers have made offers 10% to 30% over asking price and still get beat out by another buyer that had all cash. After going through this high and low emotional trip 2 or more times, many have given up but many are hanging in there. With this type of situation, rentals have gone up and will continue to rise.
It is certainly a great time to purchase a property only if there is something to buy. There are plenty of buyers looking to make the purchase but instead, they are experiencing disappointment after disappointment in trying to make offers for a home. Some buyers have made offers over the asking price only to find out that there were 20 other offers for the same house. Some all cash purchases, some with large down payments, and most of them are over the asking price as well. This is due to the lack of properties available for sale. The housing inventory is so low that it is creating a sellers market. Where is all of the shadow inventory? Until more properties come on the market, buyers need to be patient and hope that more properties come on the market.
My buyers are still experiencing multiple offer situations with all of the available listings here on the San Francisco peninsula, especially with homes that are priced under $500,000. They are getting frustrated and some have stopped searching all together. All I can say is to hang in there and something will come your way. This is still the best time to buy something while interest rates and home prices are still low. Multiple offers will continue if the inventory continues to be scarce. There might be some relief soon as banks start to release their huge shadow inventory. It is estimated that there is more then a million homes that are being held. Will this HELP? I hope so.
Home sales have declined in some areas and its due to high demand, low interest rates and a shortage of homes to buy. This creates a change in the market place. Not good for buyers but good for sellers.
Buyers around the bay area are going to be happy to see more homes on the market. Currently homes that are under $400,000 are experiencing a seller’s market. Most sellers are receiving multiple offers for their home. Every home that I have made offers for my clients have had more then 1 offer. One house in Hayward had 18 to 20 offers. Another house in San Bruno had 6 offers. My listing in So. San Francisco received 2 offers above the asking price, right after my open house, and 1 was all cash. My other listing in Pacifica received 8 offers, all over the asking price. It’s like that all over the Bay Area. It’s pretty discouraging for buyers today.
Maybe there is some relief coming soon. There is a shadow inventory due to be release around summer. I hope this will help the buyers that are trying to get into their home.
In the past few weeks the real estate market showed multiple signs of a rebound of some sort. In 20 metropolitan areas prices rose 0.2% in August but were still down 3.8% year over year. This may all change soon. In September, pending sales were down 4.6%. Could this be another beginning of a triple dip? With Freddie Mac requesting for another $6 billion of your tax money and holding about 60,000 REOs from the market, which will take approx. 15 years to sell off, I don’t think our country’s rebound in a lot of areas will happen anytime soon and hope that the triple dip is not too severe.
Some help is on the way. The Federal Housing Financing Agency is trying to help change the market. They are making a few changes to the Home Affordable Refinancing Program to attract more borrowers and stimulate the mortgage industry and helping more homeowners. The National Association of REALTORS are also concerned with the state of our real estate market and has a 5 point plan that could get us out of this triple dip situation and stabilize the market. With any change, it will take a while for the changes to make a difference. Let’s hope that it won’t be too long.
As we are getting into the last quarter of the year, San Francisco and the Bay Area have gone through a lot of changes. They could be good or bad depending on how you look at it. As I have mentioned on another post, what will the city be like in the next 5 years? I believe it should be at a point of recovery. We’ll see.
The economy has driven our home values down and there is no end in site. Many areas in the nation has experienced major price reductions. Not all areas have been hit but California has 6 areas that had the largest drop in value out of the top 10 areas nationwide. The prices have decreased more then 60% from 5 years ago. This situation will not get any better anytime soon due to the 1,000,000+ foreclosures that the banks are holding this year and another 1,000.000+ foreclosures in next 2 years. It will take a few years to sell off all of the phantom inventory before any appreciation can be realized in these areas.
With all of the budget problems we are going through, how will it affect interest rates? Well according to NAR Chief Economist Lawrence Yun, rates may increase however, there are other factors that could keep rates down.
Right now the rates have hit an all time low, 4.15%, and will stay low for another 2 years. This is due to the faltering economy. Although rates are at a all time low, sales of homes fell last month by 3.5% compared to the same time last year.
This is an excellent time for buyers to purchase their home.