A shift in the market occurs when buyers and sellers have different opinions on home values. That’s the easy, simple way of explaining it. A home is always worth what a buyer is willing to pay for it, right now, buyers are willing to pay high prices for homes, there will be a point where they will not do so and home values will drop.
The determination of what a home is worth to a buyer is typically made from several factors, two are inventory and interest rates. Right now interest rates are around 4.0% which is incredibly low considering the national average over time is about 7%. Low interest rates give buyers more purchasing power creating a larger buyer pool. Inventory is extremely low (photo 1) as well which is due to many factors including tax advantages/disadvantages causing owners to stay in their homes longer, homeowners believing values will continue to rise, a decrease in new homes (photo 2).
Because of these factors and a stabilizing economy, prices have soared making this a wonderful market for sellers who are seeing their homes sell for above asking price after receiving multiple offers in a short period of time. But this never lasts forever. The historical time for a real estate market to recover and then reach a bubble (peak prices) is typically 7 years +/- a few years depending on the market. The most recent crash started to happen in 2005 and really came crashing down in 2007 meaning we are 8-10 years into this recovery period. If we look at history, we are due soon.
As I tell everyone, no one can tell you exactly what’s going to happen in the real estate market, all we can do is look at history and be prepared. Some say we’re very close, some say it won’t happen until 2018, many think it will happen when there is a change in the administration. So, what do you do if you’re thinking about selling in the next few years? How do you know when you’ll get the most money? That’s a personal decision, what we do know is right now, you’ll sell your home for a very high amount in a very short time (with the right marketing and guidance)…will you be able to sell it for more next year or the year after? Maybe, maybe not. Was this article helpful, maybe, maybe not, but hopefully you have a bit more information to help you make an educated decision on what is best for your personal situation.
Maya Willner is a Real Estate Agent and Broker in the Bay Area focused on becoming your Real Estate consultant for life through hard work, communication and trust. Call Maya now to see how she can help you achieve your Real Estate goals! 510-387-3100 AgentMaya@gmail.com
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