Well folks, it seems that the sky isn’t falling quite yet! It’s all over the internet, and probably TV screens and newspapers, too: Home Sales have had the biggest jump in 2 years! This, in spite of the fact of the fact that interest rates have also hit a 2.5 year high?
The above-linked article has a nice activity graph, so you can see what’s been going on for the past year or so. Part of the reason we’ve been able to have such a big jump in sales is that in January and the preceding months we experienced a…OK, I’ll say it…a precipitous sales drop. Now we are well on our way to recovering from that and are surging back to a high level of sales activity.
What’s different this March from last March? The good news for buyers is that this year, there is a LOT more inventory available than last March. Last March – all last spring, summer, and early fall, in fact – was a bad time to be a buyer. It was a white-hot seller’s market. Now, though, we have a much better balance of supply and demand. When you see a property you like and are interested in making an offer on it, you stand a much better chance of actually being able to buy it at close to the asking price – quite possibly even less, particularly if the property has been on the market a while.
The bad news for buyers is that interest rates are a fair bit higher than they were a year ago. Even though the Santa Cruz Sentinel has reported a 10% drop in median home prices since November of last year, you are still likely to be paying more, per month, for your home even though it may cost you less in terms of the purchase price. However, if you are a typical buyer and won’t actually hold onto your home for longer than 5-7 years, it may be fine for you to be paying slightly more per month. Remember: you lock in your profits when you buy, and earn the money when you sell. If your home does end up costing you $50K less this March as compared to last September, that $50K is $50K added to your profit when you go to sell…and if it costs you an extra $200 per month or so in mortgage payments because of the higher rate you get on your loan today, so be it! An extra $200/month well spent.