The State of the Housing Market: Who’s Right?
It’s no secret that the housing market is changing. What was once a seller’s market has turned into a buyer’s market, and it seems to be getting worse every day. So what does this mean for you and your family? In this video, Karan will help you understand the current state of the housing market and what it might mean for your future.
- What is a buyer’s market
- How does a buyer’s market affect you
- What can you do to take advantage of a buyer’s market
What is a buyer’s market
A buyer’s market is a market where the demand for goods is higher than the supply. This usually happens when prices are high and there are more sellers than buyers. In a buyer’s market, buyers have more power because they can negotiate lower prices and have more choice when it comes to selecting a product.
The current state of the housing market is a buyer’s market. This means that buyers have more power when it comes to negotiating prices and have more choice when it comes to selecting a home. However, it’s important to note that this varies depending on location. For example, in some parts of the country the market is still favoring sellers, while in other parts it has shifted entirely to buyers.
If you’re in the market for a new home, now is a good time to take advantage of the current state of the housing market. Keep in mind, however, that this may not be the case in all areas, so be sure to do your research before making any decisions.
How does a buyer’s market affect you
In a buyer’s market, buyers have more power when it comes to negotiating prices and have more choice when it comes to selecting a product. This means that you can get a better deal on a home than you would in a seller’s market.
However, it’s important to note that this varies depending on location. For example, in some parts of the country the market is still favoring sellers, while in other parts it has shifted entirely to buyers. So do your research before making any decisions.
What can you do to take advantage of a buyer’s market
If you’re thinking of buying a home in the near future, now is a good time to do your research and start preparing for the process. Keep in mind that the market is different in every area, so it’s important to find out what’s happening in your local market.
Here are a few things you can do to take advantage of a buyer’s market:
- Start saving up for a down payment. In a buyer’s market, you’ll have more leverage to negotiate a lower price on the home you want. The more money you can put down, the better.
- Find out what your budget is. It’s important to be realistic about how much you can afford to spend on a home. Don’t let yourself get carried away by bidding wars or overspending on your dream home.
- Shop around and compare prices. There are plenty of homes on the market right now, so don’t be afraid to look at a variety of options before making a decision.
- Stay patient. Don’t rush into buying a home just because the market is good right now. Make sure you take the time to find the right property for you and your family. Don’t be afraid to wait until the perfect home comes along, even if it means waiting a few months or longer.
A buyer’s market is a great time to buy a home, because there are more homes available and prices are lower. If you’re in the market for a new home, now is the time to take advantage of these conditions. The availability of homes varies depending on what part of the country you live in, so do your research before you start looking. And be prepared to act fast, because inventory can change quickly when demand goes up. Are you ready to take advantage of today’s buyer’s market? Let us know how we can help.
Video Transcription:
In today’s video, I will answer a very important question that is on a lot of buyers’ minds today, are we in a buyer’s market, and are buyers getting all of their offers accepted below asking price? Is this a favorable time that only favors buyers? So let’s find out what the answer to that question is. Before we talk about and answer that question, let’s go on the board real quick to really look at what’s happening in the market right now. It’s November 4th when I’m shooting this and the Feds have just raised the rates this Tuesday, I believe, by 0.75%, which they said they were going to do because inflation is a record high and that’s their way to bring down inflation, bring down spending, and slow down the economy in hopes of slowing down the inflation. So let’s get to the board. Rate right now, the conventional rate right now after the rate hike is around 7%. Depending on where you’re shopping and who you’re working with, it may even be 7.5%. I’m talking about Fannie and Freddie Mac. Your conventional rates, jumbo rates maybe a little lower, maybe a little higher depending on if you’re getting an ARM or a 30-year fixed mortgage. But let’s just say for today, the average rate is 7%, which is an almost three times difference, three times higher than where the rates were in January just this year. Then you have the record low unemployment, which we’ve been seeing for a few years now. The unemployment after the pandemic, unemployment is around 3.7%. So a lot of people have jobs, I’m not gonna say a lot of people have money, but a lot of people do have money, a lot of people had RSUs that people had cashed out. So a lot of people here, especially in cities like the Bay Area, LA, and some parts of New York, some areas that have a lot of tech sector, those guys have a lot of money. Then if you have, then if you’re looking at inflation, and let me go back real quick. So money is one thing, but if you have a household of two people and both people are having either medical jobs or tech jobs, here in the Bay Area, they’re grossing anywhere 300k plus. So income is there and reserves are there, cash is there. Number three, you have inflation, which is a record high, 8.2%. And this number may not really seems like kind of low ’cause when you go buy groceries everything is like 20, 30% higher. So inflation, realistically, may even be higher. People are continuing to spend money despite the fact everything’s expensive, people are spending a lot of money. Then you have less demand. When I say demand, less buyer demand, particularly in the real estate industry. A lot of people that were looking for homes when the rates were lower have stopped their search, and so the overall buying demand is definitely lower right now. Then you have low inventory. A lot of sellers that want to sell, maybe they don’t have to sell, but they were thinking about selling to upgrade or downgrade. Now they’re thinking, well, I may not get the best value because the market’s sort of shifted and also the rates have gone up, so if I’m gonna buy the next home, my interest rate may be very high, my payment’s gonna be very high so I’m just gonna sit tight and not sell. So you’re seeing less inventory on the market. And then we have high rents. Right now, here in the city of Hayward, if you’re looking to rent like a two-bedroom, two-bathroom, a thousand square foot condo in a decent neighborhood, possibly gated community, you’re looking at the rents around $3,000. Ouch. That’s a really high rents. And that’s happening everywhere across the board. Everywhere in the country. Rents have gone high. If you’re getting real value out of this video, please hit that like button, hit that subscribe button, show me some love because I make these high value content videos once a week for you to keep you abreast of the market. Thank you for watching. I love you all. Now, to answer the question, are we in a full-on buyer’s market? And the answer to that question is yes and no. It really depends on what area you’re buying the house in, the type of property you’re buying, and the condition the property is in. I know a lot of people are believing right now the doom and gloom mentality online and they’re watching videos or they’re talking to people and they’re thinking that everyone has just stopped, the market has just completely stopped and no one is buying homes or selling homes, that is absolutely not true. Yes, the real estate market has slowed down, the housing market has slowed down, there’s less inventory, less demand out there, but there are serious buyers and serious sellers out there. But I’m gonna go back and shed some more light on the real question that we’re answering, is what kind of a market are we in right now? So we’re kind of in a market of in between a selling and a buying market. In some areas, it might be more of a buyer’s market. So I’m gonna give you an example of a real relative example, because real estate is local and it’s boots on the ground. So I’m gonna give you an example of something that happened this week, two different examples, and I’m talking about this after the rates had already gone up. So a client of mine wanted to put offer on a home, a listing that was not fully on the high, high end market but a little below, between medium to high end market. And this client had stopped searching for homes because they felt the market was not good, the rates were really high, the payment would be very high for them, this is gonna be an upgrade for them, but then they found the home that they felt like this is the one. They went to go see the home. They loved the property. We tried to run the numbers on this property before making an offer, and there were not too many comparables available for this. The comparables that were available on this property were comparables from last year and we didn’t want to go off of those numbers ’cause that’s when the rates were high and all the properties were selling like two to 300k higher than asking price. So we found a comparable that was very relative and very close proximity to our subject property and had just sold like a month prior. Mind you, it was this house that was a little bit smaller than this house that we were looking to buy in, the floor plan was not as nice, but the comparable was relative, because we had no other comparables. So what we did is, we had a discussion about this, we looked at the rate, and we looked at what the guy’s payment’s gonna be, the rate’s like sitting at 7%, and we all thought, okay well, you know, we’re gonna go just right at asking price, like maybe 10k below, thinking that the rate market’s up, no one’s really gonna buy a house right now. And we got no response for a date. And then I get an email the next day saying that, sorry your offer was not accepted. There were 20 offers on the home. I don’t know what it’s sold for, but I’m assuming that it’s sold for above asking price. We’ll find out very soon. But our offer did not get accepted. So people are still buying houses. If it’s a beautiful property, which this clearly was, with a beautiful floor plan, the price was right we felt, and it had amazing views, and a pool in the backyard, and a lot of homes in this community had not sold, the comps were very low, so it was a desirable community. So there were multiple offers. And this is happening throughout different markets in the country. So it is not true that buying has completely stopped. People are still buying homes. It is not like the 2008 crash. Well, not yet. People are buying houses. And then I wanna give you a second example that sheds light that, in some cases it may be a buyer’s market. So I have another property, another client that wanted to buy a condo that was a little outside of this area, outside of the East Bay area, 30, 40 miles out. And it was a condo, beautiful condo, but it was sitting on the market for 30 days. They had got no offers on it. And my client and I went out there, we went to go see it. She loved the place, but she was a little hesitant thinking the rate’s high. You know, she was unsure. And after we came back, the listing agent actually contacted me three times via text message and phone call asking to just make an offer and he’ll make it happen. And we ended up making an offer about 10k below asking price, got the seller, sorry got the buyer’s seller concessions to get her a two one buy down. By the way, if you don’t know what the 2-1 buydown is, watch this video up top. This is a really cool tool, or sorry, not a tool, but really cool strategy you can use today when the rates are really high. So anyways, we were able to get the buyer seller concessions to get her 2-1 buydown to lower her rate for the first two years and got the contract accepted. So this one that I just talked about was more of a medium to high-end desirable home, which had 20 offers. And then there was a home that was still in a decent neighborhood, but not so desirable, had no offers on it, and we were able to make a deal on it. So there are opportunities out there, if you’re looking to get a deal especially on homes that sit on the market longer, that have price reductions, or that are not in the most desirable areas, there are opportunities to be out made. But there is still serious demand out there, maybe a lot less, but there is serious demand. Even if your home got four offers instead of 20 offers, you have competition. So that’s where this market is still very different from the ’08 market crash where homes were just getting absolutely no offer. It was a disaster. Jobs were, unemployment was a record high, and rents were not as high, but this is a different type of a market. So you need to watch the market carefully. And if you were priced out last year or didn’t find a home this may be the market for you. You gotta run your numbers. So I would advise talking to your loan officer, running the numbers, getting the preapproval, especially with this rate hike to see what your numbers look like. Again, I say this in all of my videos, compare that number to where the rents are right now and see what that number looks like. And some of you might feel a payment shock because you didn’t do the math before but like now you’re looking at it. But in some cases, a payment might be right at where the rents are or maybe a little bit higher but you’re gonna build equity, so you want to run the numbers and see where you stand because there will be opportunities out there. Now, I’m not trying to downplay what’s happening in the market right now. No one can really predict future results. We can’t predict markets. No one can. And that’s how it’s always been. But we do know for a fact that the Feds are going to probably do another rate hike coming in December, because we don’t have the inflation in control. But real estate is a lagging indicator, unlike stocks that are volatile on a daily basis, it takes 30 to 60 days to really see the data. So that’s why I suggest, stay ready, stay strapped, know your numbers, and when that opportunity comes, you can strike if you are ready. That’s all I have for today. I hope this video was insightful, helpful. Thank you for watching. Until next time, this is Karan Singh.
