Real Estate Market Update & Forecast Fall 2013

Market Update for Fall 2013

Market Update:  As we come to the end of another summer selling season it is a good time to reflect on the past and look forward to the future of the Southern California real estate market.

In the Beginning:  Springtime of 2013 saw a flood of buyers looking to take advantage of low interest rates and the general perception that the market had reached, and was now rebounding from, the bottom.  High demand and limited inventory caused a very active market with high demand and increasing prices. 

What we Saw in the Spring:

• More buyers than sellers.  A strong “seller’s market”.
• Multiple offers on most listings.
• Average time on the market before getting into escrow was about one week.
• Listed houses sold for top-dollar and at prices that were above the comps.

The Heat of the Summer:  As summer progressed more people listed their houses for sale and inventory started to catch up with the demand.  The summer real estate market remained very active and prices held firm with the valuations that had been established during the spring.  The summer was a good time for buyers who had many houses to choose from and for sellers who were selling for more than they would have gotten for their house if they had listed it last year.  

What we Saw in the Summer:

• A more “balanced” market with a slight nod toward a seller’s market.
• Most listings sold with multiple offers.
• Average time on the market increased to a couple of weeks.
• Listed houses sold close to the asking price as comparable sale prices adjusted upward.

Where we are Now:  The summer selling season is now over.  The biggest issue that I see today is that sellers are having a difficult time understanding that the demand has fallen off from the spring and summer highs.  Decreased demand means longer times on the market and more patience is required to sell for top dollar. 

What we See Now:

• A balanced market with a lean toward a “buyer’s market”.   
• Average time on the market has increased.  Depending on pricing and ease of showing, it is not uncommon for houses to stay on the market for 45 days or longer before getting into escrow. 
• Sellers must come to terms with the current market valuations and be willing to adjust their expectations accordingly. 
  

Reflections:
Sellers:  In retrospect we can see that we should have been a seller in the springtime.  It would have been nice to sell in the spring, with an extended escrow period or with a lease back after the sale to give you time to shop for your new house.  This strategy would have given sellers a top-dollar sale and time to wait for a better buying opportunity to buy a replacement house. 

Buyers:  Now is the time to act!  If you are thinking about buying a new house or buying an investment property, I believe that your best buying opportunity will be between now and the end of the first quarter (end of March and into April or May) of 2014.

Sell and Buy in the Same Market Environment = A Wash:  If you sell one house to buy another house in the same market environment is it a wash.  If you sell in a hot market and buy in a hot market you will pay more for your new house but you will sell your old house for more.  If you sell in a slow market you will get less for your house but you will be able to negotiate a better price for the house you are buying. 

The Best Time to Buy or Sell:  At the end of the day, the absolute best time to buy or sell a house is when you want or need to move.  The real estate market, like any other fluid market, will have up and down cycles.  Real estate has proven to be a great investment over time regardless of the market environment that it was purchased in.