Market Update: December 2018
The current conditions in the Santa Clara County housing market:
- Mortgage rates are still hovering around their 7-year highs and expected to climb more in 2019 .
Several weeks ago, the 30-year fixed mortgage rate broke through the 5%-mark, the highest level since May 2011.
This is part of an ongoing upward trend in mortgage rates, which started over a year ago.
Expect mortgage rates to continue to climb putting more downward pressure on home values and slowing the economy.
- Values of homes in Santa Clara County have been dropping since June, and are expected to drop more in 2019.
Home values spiked in May of this year causing a slowdown which resulted in sellers having to lower their prices. Buyers are no longer fearing rising prices, and proceeding with caution. Resulting in few bidding wars, and homes taking much longer to sell.
- The stock market has experienced lots of volatility in the last few weeks and is at a 14 month low. The stock market has given back all its gains for the year and will not be able to keep up its bull run of the last few years. For employees of companies like Apple and Google who have benefitted tremendously from the stock market’s performance in the last few years, are seeing their wealth and a portion of their income shrink.
- Seasonal inventory for the holiday has dropped, but are at the highest levels in the last 6 years.
While the slow down in home volume in the last few weeks has resulted in faster sales of homes and contributed to home prices stabilizing in Santa Clara County. The number of homes for sale in Santa Clara County is at the highest level in the last 6 years. As new inventory gets introduced in the late winter and spring of next year, expect the market to soften and homes to take longer to sell.
What does this all mean for you?
Everything about the market indicates that the market is shifting and slowing down for sellers and now that the holidays are passing the new real estate cycle is about to begin and sellers should know what to expect moving forward.
Generally, at the beginning of the year we experience a tight sellers market due to pent up demand from buyers. These buyers have been looking for a home from the previous year and experienced the low inventory options of the holiday and are excited to see new homes starting to hit the market. There is a period of multiple offers and this excites buyers, creates more multiple offer scenarios and leads to home value appreciation.
I expect this to be a very short period in 2019 as we will already start with a larger number of homes on the market. A level we generally don’t get to until the late spring market. Sellers should understand that waiting to sell in spring will be detrimental as prices will likely be soft by then and may have dipped further.
Of course the Santa Clara County market is diverse, made up of many different micro markets.
The best advice I have for homeowners who are selling in 2019 is to plan. Planning is always an important key for selling your home. However, unlike the markets of the last few years where home sellers were guaranteed a quick sale and great price, the 2019 market will be a harsh critic of homes. Homeowners who don’t prepare ahead of time, will lose thousands and undoubtedly be frustrated when their home is not selling.
Homeowners need to understand the market they will enter. This is where homeowners can benefit by working with an agent who understands their market. By understanding the market, a homeowner will know how their home stacks up against the competition, how to price their home effectively and what improvements, renovations, or repairs will be necessary to get their homes sold in 2019.
To get started, click here to fill out some information about your home so we can get you your current home value. Or contact me today to meet and start planning your home sale, 408-582-3272.