As a Realtor in Silicon Valley, I'm often asked questions about how the "market" is doing. Is it a good time to buy? Good time to sell?
Lately however, the question has changed. Now I'm asked "is the market in Silicon Valley finally slowing down?"
It's an interesting question and I think anyone looking to buy or sell a home is feeling some type of shift.
For those who haven't been keeping a pulse on the real estate market -- I've pulled some data showing the average days on market and the average list to sale price for single family homes, condos, and townhomes in Silicon Valley over the last 12 months.
The change in sale to list prices probably jumps out the most, since we're looking at a direct decline since the highest point in March 2016. Sale prices in August are coming in much closer to list price, averaging a closing of 101.5% of list price compared to the 105.5% just a few months ago in March. Days on market have also been steadily increasing since April/May of 2016. So what does this tell us?
Homes are staying on the market longer and selling for less over asking.
So then I'm asked, "Oh...that must mean a savvy buyer should keep waiting until these numbers go down even further" to which I answer, Nope. Not really. Here's why:
This dip in the real estate market is less a "bubble bursting" and more a rebalancing of the market. We're in one of the hottest markets in the country and for quite some time now, buyers and sellers have experienced homes flying off the market and for thousands (if not hundreds of thousands!!) of dollars over asking price. Prices have continued to climb so this sales trend just wasn't sustainable. A readjustment was bound to happen and now is when it's happening. What will happen next? My trusty crystal ball tells me...
...there is no way
to know what the future holds and if the market will rebalance further.
Despite the readjustment in the market, sellers hold the slightly upper hand since inventory is low. Rent continues to rise affecting affordability and making the home purchase a more financially sound decision for renters. This rebalancing of the market also lends some power to buyers since it presents an opportunity to enter the market with the possibility of competing with fewer (and maybe even less outrageous) offers.
The rebalancing of the market paired with historically low interest rates make it an ideal time for buyers to purchase real estate.
Finally, the last question I'm asked is, "well, what if the market continues to dip and home prices go down? By purchasing now, wouldn't I be missing an opportunity to buy at less?" Perhaps...but interest rates will go up and they are heading in that direction sooner than you think.
Even if home prices dip a bit but interest rates rise, guess what? your monthly mortgage will likely be around the same as purchasing now. Except right now, you have a better chance of entering the market and claiming your dream home versus waiting for this potential-but-not-for-sure decline, which (if it occurs) would also bring many other buyers into the market as well who also want to jump at the hypothetical lower prices.
Don't miss the opportunity to own a home in Silicon Valley. A window of opportunity is open, take it...or someone else will.
And it's not just a good time for buyers to buckle down, it's also a great time for sellers to hit the market. As a seller, you want to sell your home while prices are strong and you can build the most equity. Buyers don't want to waste money renting and inventory is low -- those alone are excellent reasons to sell right away. Partnered with the low interest rates offered to buyers at the moment, homes are still flying off the market...even if it's taking them just a few extra days to get there.
Questions? Want to discuss your situation? Let's connect