Is the Housing Market showing some sign of stabilizing? With the interest rate jumping from 3% to now 6.25%, the purchasing power of buyers is significantly limited. It almost felt like buyers disappeared from the market overnight. No more flurry of showings, no more multiple offers, and definitely minimal bidding wars.
Now that we are a few months into the shift….are we seeing signs of stabilizing or the market is still free falling?
As always before I start, please like my Facebook page or subscribe to my YouTube page if you find the content of these emails useful. Well..guess what… we got some interesting statistics in August. For the first time since December of last year, the housing inventory stopped growing. As you can see from the table…and these are homes within a 10-mile radius of our office in Diamond Bar. The inventory basically remain flat in August, up only 1.5% compare to July.
Since March, we were seeing more and more people wanting to sell their homes, and fewer and fewer people wanting to buy. Why did you ask? More people were selling because they were expecting the housing price to soften and they want to capitalize on the historic COVID Equity Gain. Less people want to buy because interest rates increasing rapidly pricing people out of the market. The result? Inventory stacking up quickly, shifting the market away from a seller’s market towards and balanced market. The price went down.
The median sales price as of September 1 was very close to the price of September 1st last year. The equity we earned in the last 12 months was pretty much wiped out. So why are fewer people selling their houses now? 2 Reasons…
#1. Seasonal cycle….every year comes September, and we see about 25-30% fewer homes listed for sale. Schools are back and holiday seasons are around the corner so people shifted their attention to things other than real estate.
#2. The Frenzy is over… when it comes to selling real estate….a seller is either have to sell or wants to sell. Most of those who want to sell are selling to capitalize on the high prices. Everyone was expecting the softening of the housing market and they all started selling in March, April, and June. A lot of the want to sell are sold. What’s left on the market are have to sell. They are not motivated by price but motivated by a change in lifestyle. With the inventory no longer increasing, that brings a little bit of stability on the supply side of things. Price is ultimately determined by supply AND demand. With supple stabilizing, the price will also slow down at a slower pace. What do I think will happen to supply moving forward?
Outside of seasonal changes, I don’t see the number of inventory increasing rapidly like we had seen earlier part of this year. Most of the homeowners probably have a really low-interest rate. It just makes the decision to sell a lot more difficult when you have to give up a 3% interest rate, especially since the interest rate is 6% today.
It’s going to be a tug of war between low supply vs low demand! We will see fewer people buying and selling. Price will fluctuate up and down depending on supply and demand. Homes will take 60-90 days to sell on average.
If you don’t have to buy or sell, may not be the best time to make the move. However, if you are looking to improve your current living situation and want some guidance, let me know! I am here to serve all of you.
