Market Update - November 2018
If you've been thinking of selling your home, you'll want to keep reading. That's because this message will show you how to get a significant advantage over a lot of other home sellers in Silicon Valley. I'll explain how in just a second. But first, let me give you a bit of background on the current conditions in the Silicon Valley housing market:
1. Mortgage rates have hit a 7-year high.
Several weeks ago, the 30-year fixed mortgage rate broke through the 4.6%-mark, the highest level since May 2011. This is part of an ongoing upward trend in mortgage rates, which started over a year ago. The thing is, in spite of the rate increase, mortgage applications spiked in September. This is a signal that buyers expect rates to go up even more in the near future—something that's very well possible given current conditions.
2. Affordability is dropping, and demand might soon follow.
For the past several years, home prices have increased at twice the speed of inflation. For a while, this didn't have too much of an effect on the market, because there was so much pent-up demand and rates were so low buyers could still afford the rising prices. However, the continued price growth and the mortgage rate hikes might finally be getting to buyers. Affordability is suffering—an estimate from early summer put current home affordability levels at a 10-year low. This seems to be causing demand to soften as well. For example, the number of people requesting home tours has fallen by 11%, according to one measure this summer.
3. More home sellers are reducing prices.
Not surprisingly, the combination of sustained high prices, increasing mortgage rates, and a drop in demand is finally starting to have an impact on the real estate market. The signs are showing that this is not just a seasonal correction but more of a real estate slowdown as there are some worrying indicators. Crucially, more sellers are now reducing prices. More than that 35% of homes listed as of November 8th had a price drop.
What does this all mean for you?
In short, if you've been thinking of selling your home, then the time to act is now. In spite of the easing of demand, there are still many hungry buyers on the market and prices just off the top from all-time highs. This means you can sell your home quickly and for top dollar. However, all of the reasons I listed earlier mean this situation might not hold very long. Demand might slack off even more, and then many more homeowners might decide to enter the market, driving down prices and really ushering in a buyer's market. That's why it can make a lot of sense to move early—before this kind of awareness reaches the majority of homeowners. If you are considering selling, you can get started now by getting an idea of what your home is worth in the current market. Simply try out this home value calculator, which is based on recent Silicon Valley sales: Enter your home address here to receive a report of what your home is currently worth and once you are ready to get the process rolling (so you can take advantage of this opportune moment), give us a call at 408-582-3272. We're here to help.
Have a great day,
The Brasil Group