In June’s National Housing Survey by Fannie Mae, the mortgage giant found that consumer attitudes on the U.S. housing market are signaling the approach of a “healthier purchase market” which, according to many real estate experts, may have an impact on the Bay Area housing market and its prices.
Among those experts is Zillow’s chief economist Stan Humphries, who believes that an increase in mortgage rates and household incomes will trigger a transition from a “stimulus-driven housing market” to “one driven by fundamentals.” In practical terms, this means a considerable slowdown in the growth of property values—growth that has recently been fueled by low inventory and interest rates—to the tune of 50% or more. Although it’s likely something the market needs, this sort of deceleration isn’t something to scoff at.
Are we approaching the summit of the years-long “hot seller’s market”? And, if so, is now a good time to sell?
To answer these questions, it’s necessary to summarize what is currently happening in the local real estate market:
- In our areas of focus (primarily Contra Costa and Alameda Counties), we saw two of the highest median closing prices on record in June: $673,000 for single-family homes and $460,000 between condos and townhouses.
- It was the third month in a row where the average closing price was higher than the asking price—in this case, the difference was $16,500 in favor of sellers.
- Homes continue to sell in an average of three weeks (22 days, to be exact), qualifying June as a “hot seller’s market”.
As the last three years of Median Sold Prices for Alameda and Contra Costa Counties demonstrate,
nothing even comes close to Q2 2015. But experts predict this growth may be slowing down soon. (This data provided by Terradatum).
All three points make a strong argument for selling this summer, but there’s yet another element playing a pivotal role in whether or not it’s a good time to sell—something that affects property values, buyer attitudes, and the time a home spends on the market: Inventory. In this case, local supply remains stubbornly low at a 1.1 “months” and the total number of properties for sale is still 15% lower than a year ago. Without a doubt, the lack of inventory will continue to give homeowners the “upper hand” when it comes to selling a home until something fundamentally changes in the market.
Yet it’s important to note that home prices tend to diminish the closer we get to the end of the year. So while it doesn’t appear that we’ve already peaked, seasonal data does suggest that the next four months may be the best time to sell a home in the Bay Area…especially with the looming forecast of a slowdown in 2016.
For these reasons—especially if you’ve been thinking about putting your home on sale but have simply been waiting for the “perfect moment” to act—it’s important to start the process of interviewing several real estate teams as soon as possible. Why are you waiting to take advantage of these ideal market conditions and maximize those returns on your hard-earned equity? Call Lifestyle Real Estate Services today!