Live in the now, homebuyers
This is the truth of life: You never know how good you have it
until you don’t have it anymore. Isn’t that true of most things? We
think our job is annoying until we’re laid off. We think our
parents are overbearing until we’re on our own and paying our own
bills and braving our own challenges. We fuss over our kids’ messes
and dramas until they leave home and the quiet is stifling.
Live in the now, homebuyers
This is the truth of life: You never know how good you have it until you don’t have it anymore. Isn’t that true of most things? We think our job is annoying until we’re laid off. We think our parents are overbearing until we’re on our own and paying our own bills and braving our own challenges. We fuss over our kids’ messes and dramas until they leave home and the quiet is stifling.
We live life fully when we immerse ourselves in the “now.” There’s a saying that yesterday is a memory, tomorrow a dream and today is a gift so that’s why it’s called the present.
“What in the world does that have to do with real estate?” you might ask. The same holds true for the real estate market. When houses were selling in seconds with no inventory, I often encouraged any of you thinking of selling to do so…when you’d be in the catbird seat. But potential sellers were thinking how beautifully prices were marching upward, mentally counting those increases as if they were dollars in their bank accounts.
Today those sellers are sitting in homes beautifully readied for the market waiting, waiting, waiting for potential buyers to come. Waiting, waiting. Some of them must be thinking, “If only…”
But that’s living in the memory. Doing so guarantees a glum view of the world and an unhappy outlook. Instead let’s take a photograph of the “now” and see what it truly shows to buyers and sellers. I’m going to use San Benito County as an example, but a similar trend will be found in Santa Clara, Monterey, Merced and Santa Cruz as well. When we have information, we have options and can make good decisions.
Today, this moment, there are 496 single family residences and condos listed on REIL, the multiple listing service which computerizes all the listings of all the brokerages in the area. In April, only 22 homes closed escrow. In May, there was an upsurge to 32 closed escrows. The market is shifting. More buyers are coming back into the water.
What do they know that you don’t? For one, we’re not seeing a huge difference in the list price versus the sales price. In fact, in April, homes commanded an average of 98.6% of their asking price. Sold homes were those priced very steadfastly at the market rate. They sell at that market rate.
If you’re a seller and you’re not getting many showings, but other homes are selling, you can be pretty certain your home is listed too high. I know, I know. Last year you could have, last year you might have, last year you should have. But last year is a memory.
Imagine you bought a stock at $20 per share. It was a good company and the stock began trading and reached $100 per share. Whoa doggies! You felt like a savvy investor, indeed. But then the competition came out with a product similar and took a healthy chomp out of the market share. Suddenly your stock is trading at $70 a share.
Are you going to try to sell your stock at $100? No one is going to buy it.
“Oh,” you say. “But it’s not the same thing. All shares of stock are worth the same. But my home is unique among all homes. I picked the colors myself. I put in the best sprinkler system and landscaping.” Or pool, or kitchen counters, or flooring or outdoor kitchen or closet organizers or surround sound or whatever.
Well, another truth of life is your home’s worth is pretty much a function of its square footage and its location. Upgrades might make it more appealing, but it rarely makes a huge price difference. Consider this: You have a house worth $500,000. You put in a lovely kitchen for $75,000. Now you want $595,000 for the house. But the same house down the street is on the market for $500,000. A smart shopper will buy the cheaper house (with lower property taxes forever) and spend $75,000 on the exact kitchen they want…with their colors and preferences. You could get more than $500,000, but NOT $595,000.
So, in summary, there are more homes selling now and the ones that sell are listed at the market rate of today.
The upsurge in sales also points out another truth. The mortgage rates, phenomenally good right now, have started back up. The word out in the street is we will be looking at 7% interest rates by the end of the year. So obviously people are figuring this out: Prices are not falling, people aren’t getting the massive deals they anticipated when purchasing a new home and if they put it off any longer, they will end up paying more in the long term with a higher interest rate. If you put off buying, you’ll be thinking, “Could have, should have, might have…”
The market is always in a state of fluctuation. Call your local Realtor to help you assess your current situation.
And be kind to your Realtor.
