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Is a Home Buyer’s Market on the Horizon?

PROFESSIONALS ACROSS THE NATION SAY THE TIDES MAY BE SHIFTING

Buyers Market House Property Home For Sale Sign 3d IllustrationAfter a long winter in the housing market across the country, including right here in Montecito, many real estate professionals are predicting they see a home buyer’s market on the horizon. According to an article in Forbes magazine, the forecast favoring buyers comes from investment bank Credit Suisse, which polls real estate agents across the country every month. The bank reports that it has been noticing a shift towards a home buyer’s market and away from the seller’s market we’ve been experiencing for years now.

When, Where and Who to Trust

Housing markets tend to fluctuate seasonally, as well as on a regional and local level, which means the timing of when you choose to move can often end up translating to thousands of dollars gained or lost. If you’re considering buying or selling a home in the near future, one of the best first steps you can take is to partner with a trustworthy, local real estate agent who knows about the market.

Local agents have extensive experience buying and selling properties in their territory, which means they have a deep understanding of not only the regional markets but also how broader trends like interest rates, new legislation, economic outlook, etc., impact both buyers an sellers.

What Is a Buyer’s Market?

A buyer’s market happens when housing inventory is higher than the number of people looking to buy a house. Supply and demand dictate that when supply is higher than demand, prices decline. That’s exactly what happens with the housing market during a buyer’s market: a great time to purchase a house.

Some signs that tell you it is (or will be) a buyer’s market:

  • Home construction will be on the rise even as the demand for homes begins to decline
  • Home prices begin to flatten
  • The economy begins to stabilize (or even decline a bit)
  • The stock market levels out or becomes a bit rocky; settling inflation

What Is a Seller’s Market?

A seller’s market occurs when the demand for homes far outweighs the supply. The strong demand for real estate makes homes for sale increase in price as those looking to buy homes enter into bidding wars with other potential buyers.

Some signs that tell you it is (or will be) a seller’s market are:

  • Homes are selling for high prices, even in “as-is” condition
  • Sales-to-active listings ratio is above 12%
  • The economy is on the rise

Market Forecast

If predicting the market was an exact science, we probably wouldn’t have had the stock market crash of 2009. That being said, experts like those from Credit Suisse as well as from Freddie Mac, Zillow, and others that run surveys and large quantities of data take numbers like the average rate of houses on the market and compare it to the year-over-year data they’ve accumulated. They use all of this data to predict home prices and the housing market as a whole. Have they ever been wrong? Absolutely. So, take market trends with a grain of salt.

2nd Quarter Sales in Montecito

In Montecito, we seem to be immune to what’s happening in other parts of the country. Now is a good time to buy or sell. Home prices in Montecito continue to rise. However, the outlook hasn’t been that sunny throughout 2019. In the first quarter of this year, sales faltered even though inventory levels in Montecito rose about 14%, to 215 Total Active Listings. Despite improved selection, the Number Sold fell 12%, to 28 properties. I believe this drop was largely due to our excessively rainy January and February. Still, our average Sale Price climbed 13%, to $4,217,857, and our Median Sale Price was almost unchanged at $2,480,000. Overall, Sold Volume was almost identical to the same time last year at $118,100,000. On average, properties in Montecito sold for 89% of their last list price – a decline of 1% compared to last year.

Let’s see how Montecito real estate stacks up with the rest of the country via this graph found in the Forbes article:

City

Comments

Atlanta

“Inventory is improving slightly, and demand is still strong.” “Buyers willing to wait for the right property.”

Charlotte

“Not enough homes in the lower or more affordable price ranges; buyers waiting to find the right property.” “Mortgages are easier to obtain, jobs are plentiful, and wages are rising.” “Expecting traffic to further increase in March.”

Chicago

“Brutal cold weather and low inventory.” “Property tax uncertainty.”

Dallas

“Buyers are in no hurry as they await a shift in the market. Sellers still looking for top dollar and multiple offers. Mismatch in expectations.” “Concerns over the economy’s trajectory.” “Increased number of sellers.”

Denver

“Seeing more flexible guidelines from lenders.” “Down payment assistance programs and more affordable interest rates.”

Detroit

“Rates are leveling out and prices have actually come down over the past 4-5 months, which has helped buyer traffic.” “Quality of buyer traffic has improved even though the gross traffic numbers aren’t necessarily higher.”

Fort Myers

“Decent amount of lookers but few offers.” “Green and red tide algae has led to consumer wariness of the Gulf Coast environment.”

Houston

“Market seems to be in limbo.” “Still uncertainty in the market place.”

Las Vegas

“Many purchasers are using companies like Open Door and other online sites.”

Los Angeles

“Buyers waiting to see if rates move lower and how the new tax rules impact the bottom line.” “Still demand for housing, but sellers have yet to fully comprehend they are no longer in the driver’s seat.”

Miami

“Move-up buyers are bargain hunting in a softer luxury market.” “Low consumer confidence.”

Minneapolis

“Extreme cold weather and record monthly snow.” “Buyers looking to get a jump on the selling season and avoid multiple offer situations.” “Shortage of properties and lower interest rates.”

New York/Northern New Jersey

“Buyers are out in force but seem reluctant to purchase as prices creep higher.” “Majority of home buyers are in first-time price ranges.” “Some concern about taxes and the possibility of declining home prices in the future.”

Phoenix

“Buyers feel home properties are priced too high. Investors are low balling properties that have been sitting on the market longer than 60 days.” “Transactional volume down from two banner years; still a good market but 2017/18 spoiled agents and sellers.” “Buyers waiting for tax returns.”

Raleigh

“Relocations from the Northeast and California.” “Significant job growth in the area and in-migration.”

San Antonio

“Continued military moves; in-migration for employment and family.” “It’s becoming a buyer’s market.”

San Diego

“High prices and general uneasiness in California.” “Favorable rates brought some buyers back to the market.”

Sarasota, Fla.

“People are wary of the uncertain economic conditions.” “Winter temperatures encouraged travel to the south.” “Strong interest in second/retirement homes has rebounded.”

Washington, D.C.

“Weather and lingering concerns over the federal government shut down.” “Poor weekend weather and general market uncertainty.”


Home buyers or home sellers, whatever you do, don’t let the market dictate when you buy or sell. Work with me and get the results you deserve, whether you’re a buyer or seller. Just call me at 805.886.9378 or shoot me an email at Cristal@montecito-estate.com. I’ll happily take care of all of your real estate needs in Montecito.


 

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