State of the Market!

Hello, today's post is about the current state of the California Market. Specifically the Northern California market because there are some interesting things happening. Over the last few months there has been very decisive shift in the market from a fairly strong sellers market to a market that is softening and becoming a buyers market. That change caught many off guard and I must admit I too was caught off guard by this shift in the market place. The market was humming along at a very brisk pace coming out of last year, sellers were receiving multiple offers on homes and buyers were finding themselves in bidding wars. Which in hindsight is somewhat on par because typically around the Holidays and Winter months there are less homes on the market and less buyers in the market as well. Which I have always said can create great opportunities for sellers that don't mind having their homes on the market in the Winter and around the Holidays. With fewer homes on the market and the buyers that are home shopping during this time of the year are usually very serious buyers it can create an environment that causes a shortage of inventory thereby creating a higher demand for homes on the market. Once there is a higher demand for homes then prices will inevitable begin to increase due to buyers willing to pay more. As a result of this, everyone starts talking about how great the market is and how buyers are paying more for homes, this spurs more buyers in the market for fear of missing out or having to pay a lot more for a home. So mortgage applications increase and there are more buyers in the market to buy a home, so now we are into March and April and prices are soaring because of all of the buyers and low inventory.

As we approach the Summer months the sellers the haven't put their homes on the market are preparing to do so because everyone knows that there are more buyers in the market in the Summer months because they want to move in enough time to get their kids in school etc. Now here is where it gets tricky because (what happened this year) what can happen is a back log of homes hit the market around the same time and now you go from not having enough inventory to an over abundance. So we have all of this buyer activity, prices start soaring and they reach a level where they become out of reach for most buyers. There have been media reports every week about the home prices and how they are increasing and how difficult it is to buy a home etc and the buyers are hearing this and saying we need to wait! We can't afford to buy now. The sellers are hearing the news and saying now is the time to sell because prices are going up, so sellers start putting their homes on the market at the same time that buyers are saying we can't afford to buy now. So overnight you go from a sellers market with low inventory to a buyers market with more inventory than buyers and it catches everyone off guard. Real estate markets are fickle, 1 or 2 things change and it can totally change the course of the market. I listed a home for sale and within 10 days of listing that home 5 other homes came on the market in the same area.

Talk about buyers having choices lol...its a smorgasbord of homes out there with little to no buyers in line to buy them. I believe that we are going to have a busy Winter season although all signs are pointing to a slower Winter buying season. Now that will depend heavily on how quickly we can work through the current inventory and how far prices come down. As news of the market slow down gets out sellers will be reluctant to put their homes on the market which will help to work through the current inventory. So to summarize this post, sellers if you are planning to put your home on the market pricing is very important and be prepared to be on the market for a little while. Buyers get in the market but be patient, don't be in a hurry and you can find a great opportunity! 

Happy Friday!

James Johnson
Broker
Johnson Realty Group
Lic#01368706

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