As we approach the spring home-buying season, a number of economic metrics are creating a fairly strong buyer’s market. A few economic indicators have slowed recently, most notably GDP growth is forecasted to come in at the low to mid 2’s instead of the 3% growth from 2018. With a slightly slowing economy, mortgage rates have quickly fallen from near 5% recently to close to 4% today and home inventory has risen slightly in the past few months. These factors are bringing buyers back into the market after a fairly tough 2018 property market for them. Last year we saw more bidding wars and few discounts on sought-after properties. This caused the California housing market to slow and the pace of home-price appreciation to stagnate.
Buyers moved to the sidelines in late 2018 but finally we are seeing a reprieve with buyers starting to emerge in search of deals. Personally, just in the past week or so, I had conversations with a few buyers from 2018 who had taken a breather but are ready to start seriously looking for property again. If you are a potential buyer, it’s an excellent time to start looking for property to purchase, with mortgage rates currently relatively low and inventory up a bit from last year. In the past month, quite a few properties have hit the market and my chit-chat at the local Realtor meetings indicates quite a few agents are working with sellers and currently in the pre-stages of bringing properties to market.
Almost 50% of home sales occur in the all-important March through July season, making these months critical to the overall annual home sales market. Home prices throughout the state are up around 50% since the 2012 bottom and thus most expect prices to rise only slightly over the next year or two. The sharp rise in home prices contributed to the buyer affordability problem and slowdown in the second half of 2018. Year over year home sales dropped in the fourth quarter of 2018 and days on the market increased. We are probably entering more of a market in equilibrium than a strong buyer’s market for the remainder of the year which is a nice change. Buyers have time these days to kick the tires, visit multiple properties, and negotiate a little more than in 2018.
However, historically speaking, and despite the slight slowdown last quarter, quality homes are still selling fairly quickly and for a good price. Although we may not reach 3% growth in GDP this year, the employment market remains strong and the April 2nd US Institute for Supply Management reading of factory activity in the US was surprisingly higher than the expectation, indicating an expansion in new factory orders nationwide (a leading indicator of economic growth expected). Additionally, San Diego remains a strong housing market as the tech industry continues to move here, create jobs, and generate demand for housing.
If you are thinking of buying property this year, give me a call to chat about a list of critical issues to be thinking about as you survey the property landscape. If you are thinking of selling property this year, call me to schedule a no pressure walk-through of your property and to discuss issues to think about prior to listing your property as well as estimated property value. Phone Number: (619)589-9500.