There is no shortage of opinions when it comes to the real estate market - this is one thing we can certainly all agree on! I can speak with confidence about what I am experiencing - boots on the ground as it were.
People who hope or plan to buy a home are being bombarded with frightening economic news - some legitimate, some hyperbole - the end result being a sense of anxiety about making decisions. There are fewer people out there, actively and aggressively looking to make a purchase right now. I believe this is a mistake and here is why - Inventory!
Housing inventory is fed by new home construction and existing home sales. The average homeowner has significant equity in their home (an average of 58%) which means foreclosures are not something that will feed inventory. These same home owners are not motivated to sell and forgo their average 3% interest rate only to buy a new place at 7%. Home builders are cutting back on new housing projects due to increased interest rates and recession concerns.
All this to say, inventory is not going up in the near future, with or without a recession. The East Bay is still and always will be a place where inventory is tight, home builds are scant and people want to live, therefore, whenever there is an opportunity to purchase a home without intense competition, buyers should not wait for prices to “come down” because I do not believe they will. At least not significantly. Not with inventory leveling out as it is and will continue to do.
The housing stock is so unique in our area that there is no guarantee that the average home buyer will find the exact home they crave or need. Many buyers who come to me express a desire for features in a home that are difficult to find - most homeowners end up creating the home of their dreams as opposed to buying it turn-key.
The #1 element that drives home prices up is competition. I cannot tell you how many times I have witnessed, on offer day, a collection of very good offers driven up even higher due to counter offer(s) by the seller. Right now there is an opportunity to be the only offer or perhaps one of 2 or 3 offers. Although a seller may ask for more, when you are the only offer in hand, there is very little incentive to come up in price. This opportunity to negotiate is unusual and I suspect, as buyers acclimate to these higher interest rates and inventory tightens up, it is a passing trend.
Fundamentally we are still in a strong market, it is just different from what we have witnessed over the last few years. In reality, this new market is more sustainable and ultimately more just. For the first time in a long time I have been able to help people buy homes that were, until recently, unattainable. Now is the time to seize an opportunity where the competition is slim. I am always here to discuss the market and help with your home search or home sale.