Real Estate Tips: Why Now is the Time to Buy or Sell
/When I first started out in Real Estate, someone at an open house told me, “no matter when you ask an agent, they’ll always tell you it’s a buyer’s market or a seller’s market that they can get you to buy or sell.” My first thought is , what agents have you been talking to? It might be time to find a new one :). Secondly, I don’t think this is always the case, and it is always dependent on your specific circumstances. You just found out you’re having triplets and live in a one bedroom? It might be a good time to find a new spot. Your last of five children moved out of your 8,000 square foot home? It might be time to downsize. However, more than ever before, as of July 2020 in La Jolla or San Diego California, right now it is a good time to buy or sell.
Questions to ask yourself
Since I believe this is always situational, based on your answers to the following, you can determine if now is the right time for you. From there, read on as to why it’s good for both buyer’s and seller’s.
Have your personal circumstances changed?
Are you needing more space to account for new family members (dog, cat, kiddo), home schooling or working from home?
Have your personal finances changed?
Do you have the funds to support a down payment?
Is your location stable? Meaning, you won’t be moving for at minimum the next three years?
What makes a market?
Based on the principles of supply and demand, we determine if it’s a buyer’s or seller’s market dependent on current inventory of homes for sale, and the demand from the buyer’s that are looking to purchase.
Seller’s Market: Low supply of homes for sale meets high buyer demand. It is a market condition characterized by a shortage of inventory available for sale, resulting in pricing power for the seller.
Buyer’s Market: High supply of homes for sale meets low buyer demand. A buyer's market refers to a situation in which supply exceeds demand, giving purchasers an advantage over sellers in price negotiations.
Now, within these two conditions, there can be some grey area as there are other variables that contribute to these results such as low interest rates. All in all, you look to these to see where things stand, which allows you to make the most educated decision based upon where you’re at.
Why it’s a good time to buy
Mortgage rates are lower than ever. Most recently, my clients were approved on a loan at 2.85% for a 30 year fixed. To give you an idea on what this looks like in terms of dollars saved over the life of your loan on this rate vs. where it was last year (4.25%) see my comparison chart below. You’ll see the savings is upwards of $450,000! Because of this, it increases your buying power, meaning how much you can afford to spend on a home, since you’re not allocating so much mulah towards your interest.
The annual real estate appreciation in San Diego is in the top 10% nationally. In San Diego, the average annual appreciation over the past ten years has been around 5 to 6%. According to a report by Zillow, San Diego was expected to be California's hottest housing market in 2020. During the 20 years from 1998 to 2018, the median home value in San Diego rose by a whopping 217%. Based on these numbers, if you purchase a median sales priced detached home in San Diego right now ($675,000) that home would be worth $2,185,000 in 2040! This breaks down to $207 per day you earn on appreciation, without even making improvements to the home. Thus, you could be losing out while waiting to buy when rents are continuing to increase.
Why it’s a good time to sell
Inventory is very low. Sales are up, average days on the market are down, and the median sales price is up 27%! If a home is priced correctly, it is going off market within days with multiple offers on the table. Take advantage of this demand, while there is high demand because interest rates are historically low. See below a table that showcases the activity of closed sales so you can see how strong the market is for seller’s.
Buyer’s are real and willing to accommodate your needs. Because lending requirements have increased, buyer’s are more qualified than ever. Also, due to the competitive nature of the market, they know they need to make their offers more appealing beyond just price, which often includes a shorter time window. Also, because you’ll likely receive more offers, you can accept a backup offer which drives a buyer to perform.
For a full rundown of where the market stands in both San Diego county and La Jolla, click the links below for a customized Berkshire Hathaway HomeServices report. If you’re wanting to discuss if it’s a good time for you to buy or sell, let’s connect. We’ll walk through your goals and where you’re currently at to determine the right path forward.
San Diego Market Update - July 2020
La Jolla Market Update - July 2020
