The housing reports are out for Q3. All the terminology can make one’s head spin. The charts and graphs and month over month figures…what does it all mean to us regular folks? We will break it down for you. It’s really a matter of Supply and Demand, and Cause and Effect.
The housing reports contain both good and bad news. It is good news for the sellers and home owners who are getting appreciation in their home values and equity. This also gives the economy a boost of consumer spending. It is not as good for home buyers. Due to the rise in home values, many hopeful home buyers are getting priced out of the market or choosing to stay out of the market altogether.
This past spring and summer, the San Francisco Bay Area, and the nation as a whole, enjoyed steady improvement in home values. Inventory was very low in many areas. (This was caused by folks staying out of the market, some underwater on their mortgages waiting for values to come up) There were multiple offers on most of the homes that came on the market, which caused a slow creep up in prices. New home-builders rose to the challenge to help make up the lack of inventory with new homes. We were experiencing what is known as a sellers’ market.
As home values increased, more folks ventured back into the market. There were more homes available to buy, so the supply began catch up with the demand. As the prices continued to creep up, along with the increase in inventory, many buyers were priced out of the market. We seem to be moving back to a market that’s more balanced, with home value increases that are more realistic and sustainable.
As the season changes, predictably, so does the real estate market. Overall real estate activity slows this time of year, so as we move into the winter season, month over month appreciation slows, but compared to a year ago, home prices have greatly improved! Of course, the housing market was shaken up by the federal government closure/fiasco in October, which lengthened the loan approval and home closing processes, primarily on FHA transactions.
“The recent uptick in interest rates, along with the increase in home prices since the beginning of 2013, sadly, has lowered housing affordability. This is causing many buyers to consider more affordable options such as town homes and condos, especially in our San Francisco Bay Area, where there are more of these types of properties
As we enter the seasonal lull in real estate, home prices are expected to be tempered, and the year over year price gains may start tapering off in the coming months. The growing fear of another bubble can be laid to rest. It is still a great time to buy or sell, especially with interest rates still at historical lows. Call, email or text us today. Let’s talk about your plans.