Dazed and Confused!
That’s my best description of the South Orange County Real Estate market right now.
Here’s what’s going on:
The inventory of homes for sale is high; that is to say the number of homes for sale would take approximately 7 months (at the current number being sold monthly) to deplete the market. That would mean high supply low demand. Right? Not really.
So buyers in the marketplace listen to the news and read the paper and think, “The housing market is slowing, supply is high, demand is low and prices are soft, so let’s low-ball the seller or just wait until prices come down further.” Right? Not really.
Sellers look at what price homes have sold for in the past several months and think, “Prices are still high, the house that just sold down the street isn’t as nice as mine and I’m priced just above the last comparable sales, so why isn’t my house selling?” Right? Not really.
Real Estate agents read the paper and listen to the news too and they’re sitting around saying, “Well, my listing is priced right but it’s been on the market for 60 days and hasn’t sold, my seller is ticked off at me and the news does say the market is slowing and interest rates are climbing.” Right? Not really.
Here’s what’s really going on:
About 40% of the homes for sale right now are simply priced too high. So the high inventory really isn’t there because those overpriced sellers are motivated by nothing less than greed. They have no real reason for selling other than cashing in on what they perceive are foolish buyers (which for the most part don’t exist anymore). Consumers, be they buyers or sellers, are more informed these days, confused yes, but informed.
Have you ever been flying down the freeway for a prolonged period of time, then had to exit and finally realized how fast you were really going? I mean 45 or 50 miles an hour seems like you’re hardly moving at all when you’ve been doing 80! That’s what going on with the Real Estate market right now.
We’ve been cruising along at 200 miles an hour for a couple of years now and all of a sudden we’re back to normal speed and everyone thinks, “We’re stopped!” We’re not stopped, we’re just moving at a normal pace again. True, it may feel slow, but it isn’t; it’s just normal speed.
Buyers are still paying reasonable prices for nice homes. Reasonably priced homes in great condition are still selling, albeit at a slower pace than in years past, but in what are historically normal time frames. Yes, interest rates are higher, but they are still at a 25 to 30 year low. So what’s all the fuss about? It’s all about confusion.
Buyers, you need to understand that sellers aren’t stupid. Unless there are serious and extenuating circumstances like death, divorce, sudden and severe health issues or a “killer” job transfer, sellers are not going to sit around and let themselves be taken advantage of. By the way, believe it or not, prices are rising! That’s right; they are continuing to increase not to drop.
Sellers, right now buyers have a lot of choices. Unless your house is drop-dead gorgeous, I mean beyond “Model Home” gorgeous, you need to be priced just below the most recent comparable sales. That’s right below! If not, you need to be willing to sit on the market for multiple months, like 4 or 5 months, until the market changes, unrealistic or greedy sellers drop out, or simply until you get more realistic.
And agents, for heaven’s sake, stop buying into all the negative media about the market! Understand that if you’ve been in the business less than 3 years, you have no idea what a “normal market” is! Houses selling with multiple offers in 4 days is NOT normal! You may actually have to learn how to work at your profession! Learn the skills that it takes to market a home, to price it properly and render customer service - like staying in touch with buyers and certainly sellers. Communicate!
Oh by the way, remember that we live in one of the most beautiful places on the face of the earth. People come from around the world to vacation where we live. Homes are where we spend time with our families, raise our children and come to for refuge at the end of a tough day. Homes are a place to build and store memories. They are a part of the “American Dream”. Yes, here in Southern California they have developed into an investment opportunity, but they are supposed to be, first and foremost, where you enjoy your life!