27 Aug Prices of Existing Homes Hit All-Time High
The below contains excerpts from a recent Realtor.com article that I found very interesting and worth sharing with my homeowners.
It’s getting ever more expensive to buy a home, as the median price of an existing home has hit a new all-time high—and is likely to keep rising.
“It’s Economics 101: Demand from buyers is high, and the number of homes for sale is pretty limited,” so prices are going up, says Chief Economist Danielle Hale of realtor.com®. “Especially for entry-level homes in move-in ready condition, buyers can expect lots of competition, potential multiple offers, bidding wars, and homes that sell quickly.”
This is great news for homeowners who are looking to sell right now.
There will always be the caveats of mortgage rates, inventory and attractive offers from new construction homes, but the real estate market is still proving to be alive and well. While there is some fear of all-time historical high prices, terms are still being negotiated and closings are happening.
However, all of this may be about to change. This Summer has been strangely ‘quiet’ as both sellers and buyers adjust to the subtle changes that are happening in the San Diego market right now. More homes coming on the market, as is evidenced by more ‘for sale’ signs than we have seen in years. Homes sitting on the market longer than usual.
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in San Diego in September 2017 was approximately 21%. By May of 2018, that number fell to 16%. According to C.A.R.’s Traditional Housing Affordability Index (HAI). This is the 21st consecutive quarter that the index has been below 40 percent. California’s housing affordability index hit a peak of 56 percent in the second quarter of 2012.
Like anything else, when so few families can afford to purchase any commodity, prices soften.
When you couple the severe ‘lack of affordability’ with rising interest rates and increasing inventory of homes coming on the market, that we’ve seen this summer-for the first time in over 5 years-all of the signs are there, that our housing market may be shifting from a total ‘Sellers’ market’, to at least a ‘balanced’ market-if not a full-blown ‘Buyers’ market’ in the coming months and year.
Where this ‘shift’ takes us will largely be determined by rising interest rates along with ‘supply & demand’ of housing inventory, and the ‘absorption rate’, in the months ahead.
Please feel free to contact me if you have any questions about the market or would like to discuss ‘timing or strategy’ based on your personal situation.
I can be reached at cell # 858-336-1114-call or text.