Bay Area Buyer's Market? Not Quite, But it's Getting There...

Have you checked Zillow, Trulia or Realtor.com later? That's no typo. Homes are staying on the market MUCH longer - 30, 60, 80 days or more. Not every home of course, but on average. Although most homes do sell within 45 days, buyers are not asking for a ton of stuff; credits toward closing costs, interest buy downs, inspections, appliances and of course, price reductions.

And throughout the U.S., prices are set to stay flat over the coming months amid elevated mortgage rates - the biggest culprit bringing the market much fewer qualified buyers than just a few years ago.

During the pandemic,?lower mortgage rates?sparked a rush in homebuying that escalated demand for properties that in turn contributed to a jump in prices. But?soaring inflation?forced the Federal Reserve to hike interest rates which pushed up borrowing costs for?home loans. A jump in mortgage rates ensued which, along with high prices, has made buying a home unaffordable for many Americans.

This situation has hurt demand for homes even as listings have increased. If mortgage rates continue to stay high, it could lead to prices decelerating which may help give some relief to prospective buyers.

Any price slowdown was unlikely to be similar to the declines seen during the 2008 financial crisis. An oversupply of homes along with a foreclosure crisis sparked a collapse in home prices as there was little demand in the economy to help prop up the market at that time. At that time, there were so many homes for sale and cheap - and we couldn't give the stuff away.

What's different today is we have a huge housing shortage - even with all the new homes that are being built we're still coming up short and to go from bad to worse, no one is buying as much or as fast in the pandemic days. So, rather than a housing crash this time around, I think we're going to have this prolonged period of unaffordable housing and that's on both the rental side and the homeownership side. So while witnessing a jump in inventory and a drop in prices which is helping to make homes relatively cheaper, it's still an affordability issue for many qualified buyers.

Even if the Federal Reserve cuts rates this year, the cost of a home loan is likely to go down from the current 7 percent to about 6.5 percent, which could still make it tougher for?first-time homebuyers because that's still just not good enough.

Know what I think? I think it's more a story of both prices AND rates have to go down; but usually these two appose each other, not compliment each other.

SO WHAT'S THE DEAL:

Basically it's just a tough time for buyers because of how high mortgage rates are and the lack of selection when it comes to homes for sale. Top that off with inflation and we have a recipe for absolutely nothing... few are selling and FEWER are buying.

What I DO FOR MY BUYER CLIENTS

To increase a buyers home selection in a low inventory market, I "target market" to possible "off market" homeowners. I purchase specific lists of homes that are owned by baby boomers, empty nesters, most likely to sell (7-10 ownership), probate, death, births, divorce, job transfers etc. and tell them that I have a RWA buyer (Ready, Willing and Able) that will purchase their home at full market value (or better) if they would consider selling. If it works out, it's a win/win. It a win for my buyers as they get their dream home with a home with the features and in the neighborhood they desire, and it's a win for the seller as he gets his sale price without even putting a sign in the yard. This does take a bit more time and effort, but that's what I signed up for. Reach out if you would like more information on how to buy off market properties.

Bruno Versaci is a Realtor in the San Francisco bay area and is brokered with eXp Realty / The Davis Team. With a focus on East Bay cities and counties, he also specializes in finding buyers off market homes specific to their needs and in the neighborhoods they desire with little or no competition. You can reach him at [email protected] or call/text 917-709-7324 for personal advice and tips in todays' bay area real estate market.