Bay Area Monthly RE Market Update
In the last 6 months homes have sat on the market longer (compared to the first half of 2018) and prices have been slashed.
The Following factors have driven buyers away,
1. High Prices Home prices grew at a higher rate than the rate of inflation and incomes in the last few years.
2. Mortgage rates >25% increase in mortgage rates resulted in some buyers being put out of market
3. Wall Street Effect The noise about another recession and a dip in stock prices has left many buyers who were planning to use their stock options for down payment with less money and tempered their purchase. Besides, the psychological fear such events causes.
4. Migration Bay Area is the top region in the nation for outward migration. Though many pockets in Bay Area have also seen net positive migration.
On the Supply Side inventory has increased for the following reason,
1. Chinese investment down According to reports Chinese investment in RE decreased by 50% from 2017 levels. Slowing the home prices.
2. Sellers want to dip into the equity Sellers thinking that the home prices may continue to go down are bringing their property to the market to cash in on the equity, resulting in doubling of inventory compared to 2017
1. The inventory is still lower than normal and keeping the market on the seller’s side
2. Demand, though slowed compared to first part of 2018, is still hot
It’s a good time for both buyers and sellers.prices have declined 5-10% and with minimal or no bidding war. Sellers still benefit from low inventory and relatively hot demand.