The beginning of 2019 saw a fairly strong start for the Peninsula real estate market with a slight uptick in inventory and many properties getting into contract, some even receiving multiple offers. Open houses have been busy with neighbors and potential buyers wanting to know what’s going on with the market, and many buyers are looking to wrap-up their purchase before mortgage interest rates increase.
The two questions we are being asked most often are, “When will mortgage rates increase?” and, “Are home values going to fall?” Though nothing is ever written in stone in the real estate market…ever…the National Association of Realtors (NAR) estimates that rates will “trend sideways,” meaning we’ll see more of the same, ostensibly because the recent government shutdown coupled with generalized economic uncertainty has the underlying effect of keeping rates fairly low.
As for home values, any speculation that we are in a bubble is really just sensationalism. Economists and industry experts agree that the fundamental elements of a bubble just don’t currently exist. In fact data indicates we are in a housing shortage due to a failure to produce enough homes in pace with population growth and job growth. That said, the days of easy price gains are done for now as we see appreciation slow down and home sales flatten. This market adjustment is part of a natural cycle, which though normally runs in 7 year cycles, has taken almost 10 years to occur after the Great Recession. It should be noted that market corrections of this sort are not only natural, but also provide stability in the market which is good for us all in the long run. Bottom line, the National Association of Realtors estimates a fairly boring forecast for home sales overall this year – a simple 1% increase in sales volume.
So what does this mean if you’re considering entering the Peninsula real estate market? If you’re a seller, sell. There are still more buyers looking than there is inventory available, and houses priced correctly are being snapped up, sometimes still with multiple offers. But word to the wise, since we have entered a more reasonable market, don’t expect to get a 15% increase over the most recent comp in your neighborhood for a home which has deferred maintenance (which was a regular occurrence in 2017). To get your home sold for the highest value, you need knowledgeable advice on what items to invest in repairing or upgrading, and how to price, market and negotiate the sale of your home. Fortunately for you, we happen to have the expertise!
If you’re in the market to buy, we say buy. Though the Peninsula market is still short on inventory, this is a situation which is not likely to correct itself anytime soon, if ever. If you’re strategy is to wait for home prices to dip down to an amount in-line with the rest of the nation, you will be waiting for an eternity, and likely paying high rent in the meantime. The best advice is to go through the process with a professional who can deliver as many items on your wish-list, within your budget, and has the industry contacts and negotiation skills to give you an edge over the competition. And you’re in luck because we have those skills!
For more specific information on the market in your neighborhood, a competitive market analysis of your property, or to get started with the home buying process, please give us a call:
Josh (650) 400-7142, Lindsay (650) 224-4130