This story was in the LA Times this morning (Aug. 22, 2014): http://www.latimes.com/business/la-fi-home-sales-20140814-story.html
I'm citing it because as an agent 'in the trenches' I've seen a trend in residential home prices coming to a plateau and perhaps a slight decline in some areas of Southern California and this story provides corroboration in detail. It's hard to argue with the numbers.
At the risk of being labeled a fear-monger, I want to highlight the very real possibility that this trend could continue in the coming months and it may become significantly more pronounced for a few glaring reasons. Here are three things to think about if you're on the fence about selling your property.
- If interest rates have anything to do with it (and of course they do), selling may be the ticket before they go up. It stands to reason that mortgage rates have been so low for so long, any significant upward movement will cause tremendous waves throughout the housing industry and can most definitely rain on the appreciation parade. In fact, it's feasible that home prices could take quite a tumble. I don't think anyone in the mortgage industry would disagree that rate hikes are coming and most likely during the first or second quarter of next year or even possibly toward the end of this year. If potential buyers are staring interest rates in the face that are a full 1 or 2 percent higher, they are naturally going to be less inclined to pay asking price or they may simply be unable to swallow the increase in monthly payments even if they were willing to pay top dollar.
- Secondly, we're entering the holiday season. Not much to say here other than the reality that historically colder weather yields less activity and less activity means more difficulty selling your home. Combine this fact with reason number 1 above, and by the time spring rolls around next year, you may have written off a sizable chunk of money.
- Finally, developers have slowed the pace of new home construction. This gives the advantage back to existing/re-sale sellers in that there are fewer new homes to choose from. It may be wise to take advantage of this window. Once builders get that warm fuzzy feeling that they can ramp up construction again, re-sales will once again be up against new-home fever. Additionally, builders may come up against the need to lower prices simply to move existing inventory in a contracting market, and existing homeowners will have no choice but to compete. We've already seen some evidence of several builders pricing their homes at or below re-sale prices.
Here's the good news: We feel that demand, that is the sheer desire to own a home, can currently outweigh or at least wash out the plateau in pricing we're seeing right now. But that arrow in the quiver may be deployed soon. Our advice: Do the best you can with what you've got, and do it now!!
While we're always cautious about the possibility of being perceived as instilling fear in the minds of homeowners, we can't neglect being realistic and honest about what market indicators are saying. Heck, it's what we do and why we're here. We want the public to know what's going on and how these indicators may affect them. If you'd like to discuss these ideas or just shoot the breeze, please connect with us. We want to help! We can provide you with the advantage that's so important to maximizing your potential. Our being competent and able to provide both mortgage AND real estate services gives you an edge. We can prove it!
Get in touch at www.williamsrealtyhome.com
Dedicated to defending honor and integrity in the real estate industry,
Paul Williams
