Warm Weather and a Real Estate Forecast – Good morning. I hope everyone enjoyed the 90 degree weather this weekend – I could have sworn this was March and not July. Living in San Diego definitely spoils you when it comes to weather. This morning I was watching a report on Fox News about the snow levels in Chicago. The newscaster started the report with ‘it’s still clearly Winter here’, that’s amazing considering we are suffering from prime Beach Weather here – I guess it could be worse . . .
I wanted to provide a bit of information as it relates to the sales figures that we saw in February. As we approach spring and what most consider agents consider to be the ‘peak sales’ period, I thought I offer a forecast as to what we may see.
February was another month with lackluster home sales. It was the fifth month in a row where sales fell short of the same month a year earlier. The March-through-May data will give us a better sense of what’s been holding back activity, but my opinion is the lack of inventory and increased rates will echo what we have been seeing. As we know the two driving forces in the market are supply and access to funds. With record low inventory and continual lending constraints it’s going to be a tough go.
As you know by now, January provided us with numerous lending guidelines that had been on hold since 2008. We have had loan amounts reduced, qualification guidelines tightened and credit requirements increased. With the Fed ending QE (Quantitative easing) interest rates are expected to slowly increase over the next several months. This means that if you’re
considering buying a new home, now is the time. If you’re a seller looking to get your home listed, the same applies. Now is the time. Buyers want ‘cheap money’, if rates increase then you should expect to see sales prices decrease. Now, with that though we have started to see rumblings in the secondary markets – so it’s not all bad news, things are looking up. Several lenders are working right now to provide programs that we had seen in years past. Many of these programs are focused on the self-employed borrower.
With Stated loan products being the primary source for the self-employed, having these loan products become available again will be HUGE. Even if rates increase a full point, statistically we have seen sales volume accelerate if buyers have a way to source a mortgage. That is where the secondary market comes in. If listing your home is something you are considering, your timing couldn’t be better. I expect to see sales figures stabilize over the next 90 days. I think the market has already priced in the Fed’s tapering calls. The Bond Market where interest rates are based is poised for the Fed’s pullback. So to say we are going to have a huge run up in rates is a bit conflated. I would be surprised if rates moved more than .375-.50 by years end. Buyers know this and will be out looking for new homes – I wouldn’t be surprised if we saw a double digit jump in sales by August.
Buyers – now’s the time. Inventories will continue to tighten. If you considering purchasing a new home – GET STARTED NOW. With rates still at record low levels and the Summer Sales season approaching a call to my office is something you should be considering. I would be happy to sit down with you to discuss what your needs are and setup a FREE custom home search that does all the work for you. The system my office employs allows you to view any area, any home and any price point in real-time. My goal is to make buying a new home a painless process. Call my office today or email me. I look forward to hearing from you.