Let us talk about the real estate market
Last updated 4/17/2020 at 4:40am
Inventory is still historically low. Yes, demand has slowed due to market uncertainty. If you are waiting thinking you are going to get a discounted deal, think again.
Market time is well below historical lows. New average market time is now 90 days versus 46 days. We have now approached what is called a balanced market. I.e., neither a seller or buyer advantage. A balanced market is expected marketing time versus actual market time which is now between 90 to 120 days.
Our inventory is still historically low and demand is still there but a bit delayed due to this pandemic. It will rise again as uncertainties recede, and the market returns to the strong demand evident in all numbers from 2019 and 2020. The inventory has dropped 47% from the high this year. Many have withdrawn to wait out the shelter in place order.
Why? Mortgage rates are still historically low – let’s look at the numbers: $500,000 at 3.5% interest rate means the payment is $2,245 versus $2,997 at 6% which was considered low historically. The low rate environment boosts affordability, hence more buyers.
Where do we go now?
COVID-19 will limit new supply and damper demand – hence the movement to a balanced market. There is a tug of war between buyers’ thinking and the market realities. Most sellers are not over encumbered and not stressed.
Our market is still projected to appreciate between 3-5% in 2020.
Low interest rates help instigate demand and fuel a quick recovery.
The only sluggish market will be the luxury market as those buyers are what is called the recreational buyer and their market time will increase dramatically the higher the price point.
These opinions and facts are based on data collected from reliable real estate data from the MLS and the opinions are mine based on over 50 years in the real estate business with all of the ups and downs.
Pam Moss’ broker license is CA BRE 0041292. She can be reached at [email protected] or (714) 296-9300.