As you might have seen or heard, the summer ‘selling season’ is in full effect and the real estate market continues to have a tremendously low amount of inventory for sale. According to the California Association of Realtors, annual home sales are now down about 6 percent while the median home price is up 24 percent – with a record low inventory. What is interesting is that the number of real estate agents saying that now is a good time to buy has declined, while the number of agents saying now is a good time to sell, has spiked dramatically. While prices have soared in the last year, sales have not. According to C.A.R., inventory is down about 60 percent from 2007 – when we started seeing the housing bubble in full bloom. With record low interest rates, buyers are more incentivized to buy – it’s only human nature to want to get ‘in on the game.’ But because of these low interest rates and a lack of homes for sale, we are seeing bidding wars driving up sales prices and usually the winner is an ‘all cash buyer.’ This is not to discourage the financed buyer because there are homes out there for the taking – they (homes) just need to acted upon fast and be willing to pay above or at true market value.
According to Stan Humphries (Zillow’s Chief Economist), The housing market is… recovering quite nicely, trying to get back to normal, Humphries said. “But there two big factors distorting the market… The first is negative equity… and the second big distortion is incredibly low interest rates. However, just being above water may not be enough to comfortably sell because of down payments, real estate commissions, taxes and other fees tied to sales, Humphries said. Having at least 20 percent positive equity, Zillow analysis says, is especially important for those who are selling to move to a home of equal or greater value.” In short, as we start seeing interest rates creep back up, and with sellers building more equity, we will start to see the market level out a bit – seeing a truer market that accommodates both buyers and sellers somewhat more equally.
So, is it the right time to buy? Yes – if the deal is right! Interest rates are bound to go up eventually, so take advantage of these record lows now.