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Real Estate Round-Up: Where have all the buyers gone?

California’s housing market has faltered for the fourth straight month in September. Home sales in San Diego County declined by 10.4 percent in August in a year over year comparison. In Fallbrook, only 38 detached homes closed escrow this September compared to 55 in September 2017. These numbers projected over an annualized number would put total sales in the state at under 400,000 units. So, what is going on?

Active listings, in comparison, have risen for five consecutive months, after 33 months of straight declines, increasing 17.2 percent from 2017. This increase in inventory has led to an increase in price discounts. Interest rates have risen to 4.55 percent in August, up from 3.88 percent in August 2017.

San Diego has record unemployment, falling to 3.4 percent in August. This is below the state average of 4.2 percent and the national level of 3.9 percent. For the first time in 20 years, there are more job openings than there are people looking for work. There are more jobs than people out of work. The US economy has never experienced that before. There are 6.7 million job openings and 6.4 million workers available to fill them, according to the Bureau of Labor Statistics. So, what is going on?

Consumer debt has risen only 5 percent annually for the last few years. Past recessions were preceded by debt increases of 10 percent or more. More importantly, the largest part of that debt is home mortgages.

Consumer confidence this year is at an index level of 127, the highest reading in more than 20 years, (100 is considered neutral). Gross domestic product is 4.2 percent for the second quarter of 2018. GDP in the United States averaged 3.22 percent from 1947 until 2018. So, what is going on?

This lack of activity is unprecedented. The Fallbrook market is historically strong from Sept. 15 through the end of the year. Most buyers are retired, so they’re done visiting their families and seeing their grandchildren, they are done with their vacations, and ready to find that new home before the holidays.

I’m writing this from Long Beach, California, while attending the fall board of directors meeting for the California Association of Realtors. I spoke with Leslie Appleton Young, CAR’s chief economist to get her read on this stall we are experiencing. She believes that the market is re-calibrating. Many of the buyers experienced the 2008 dramatic drop and are not willing to take that risk again. Interest rates are also slightly up, so buyers trying to get in the market, are being priced out. It is happening across the state and the nation.

We appear to be heading into a level market; one where neither the sellers nor the buyers have the upper hand.

My suggestion is: If you are a seller 1) Do not overprice your home. If you price your home slightly below market, you could end of with multiple offers which will push your price up. You can’t underprice your home, but you definitely can overprice your home, which will only lead to frustration for you. Statistically, homes that are overpriced eventually end up selling, once reduced, but for much less than if they had been priced correctly from the beginning.

2) Work with an experienced Realtor who can help you determine that price and negotiate strongly for you.

If you are a buyer 1) Work with an experienced Realtor who can help you understand the correct value of a home and will negotiate strongly for you.

Sellers and buyers can win in this level market. We’re here to help!

Kim Murphy can be reached at [email protected] or (760) 415-9292 or at 130 N Main Avenue, in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.

 

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