• Michelle Plunkett

The Real Estate Market is Changing - What Does That Mean?

Updated: May 16

With the rising interest rates, we are seeing a shift in national and local real estate markets. Of course, each segment of the market will respond in a different manner and on its own time line. The fact remains that as a buyer, or as a seller, your plans may need to adjust. The question is how much should your plans change. There is a temptation to over-correct when change is new.

“Shift" vs “Crash"

While there are public discussions of an upcoming real estate market crash, the local market metrics do not support these theories. Yes, the increase in rates point to a slow down but a slow down in an already white hot market does not equate to a crash. Indeed, a shift to a buyers market is not likely either; we will still exist in a seller’s market for some time. The reason is simple; we do not have enough homes on the market to come anywhere close to an over supply which would result in a buyers market. This will continue to be a sellers market until we start seeing a lot more inventory. In Southern California, pre-pandemic, we had a 3-year average of 37,451 homes on the market. As of last week, we only had 17,500 homes on the market [SOURCE: Steven Thomas, Quantitative and Decision Sciences, BA at Reports on Housing]

Purchase / Buyers

If you are looking to buy a new home, this is the time to really compare lenders in order to find the best rate and lending product for your situation. While you shouldn’t be waiting around for prices to come crashing down, the market shift may be helpful to you in that the competition may cool off a bit. Contact us for lender referrals.

Sell / Sellers

As a seller, pricing your home becomes more important in this environment. If you over price, you may be sitting on the market for longer than you anticipated. But, if you under price too much, the market may only bring you full price offers due to less feverish competition to push offers up. Make sure to fully analyze the comparative sales with your agent.

Combined Purchase with Home to Sell

The silver lining for some is in this bracket. Trying to purchase a home contingent on your selling of your current home has been almost impossible in this market. With this market shift, this type of arrangement may become more acceptable creating opportunity for those unable to buy before selling their home.

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