As we all know inventory of existing and new homes in the Bay Area has been at historic lows, which has benefitted homeowners as price appreciation has risen steadily over the past six years, especially in the East Bay. However, a rise in interest rates, thanks to the Federal Reserve, combined with a shaky political atmosphere, combined with homeowners thinking now may be the time to cash out is almost certain to increase housing inventory for 2017. For prospective sellers that means that if you were planning to sell your home this spring, it’s time to get a move on!
Here are seven reasons why now may be the time to sell in the East Bay.
1. Low inventory
Inventory of homes in both Oakland and Berkeley dipped steeply in the fall and while Oakland still has a few new homes for sale, according to predictive analytics provided by Altos Research, Berkeley is currently seeing a spike of new inventory over the past two weeks. Are sellers already racing to put their homes on the market to take advantage of pent up buyer demand? We think so.
2. Equity is on Your Side
When the housing bubble burst, home values plummeted, sending many mortgages underwater. Thankfully, the tide has turned: According to CoreLogic, only 8% of homes with a mortgage had negative equity in 2016. If you’re not sure where your equity stands, ask one of our Realtors to run a free comparative market analysis (CMA) to determine an approximate value for your home. Most likely, your home has appreciated significantly if you have owned it for more than five years.
3. Home Price Appreciation
“With the kind of home price appreciation the East Bay has experienced in the past ten years, with many owners realizing over 40-50% gain in value, I am hearing that sellers are thinking it’s time to cash in their chips and move out of the area”, stated Tracy Sichterman, Berkeley Hills Realty. Homes in Oakland which at the bottom of the market in 2009 were selling for $300k are now valued at over $600k and are owned by sellers who can now sell their homes and buy a home outright in many markets in the US. For sellers in Berkeley who purchased their homes at the median price of $555k in 2009, they have experienced a 50% price appreciation now that the median price of a home is at $1.1 million. “Many Northern Californians are deciding to go to housing markets that have much of the vibrancy that they have enjoyed in the past, but can be found elsewhere for half the price of housing in the Bay Area such as Denver, Seattle, Austin and Portland and they can put money in the bank, too,” Sichterman pointed out.
4. Buyer urgency
Buyers have consistently been challenged with rising home prices, lack of inventory, multiple offers and now rising interest rates. The buyers in the market right now are ready to go and are out searching intently, meaning days on the market are still under 45 for most homes that are priced well. The Fed has all but promised more interest rate increases in 2017. “Mortgage rates going up is a bit of euphoria and optimism over [Trump’s] promise to lower taxes, increase infrastructure spending and drive 4% economic growth,” says Nela Richardson, Chief Economist at Redfin. Buyers who are stretching to meet debt-to-income ratios won’t be able to wait, putting them in a “hurry and buy” in 2017.
5. Spring Market, Busy Market
In the Bay Area, most homes are sold at the best price in the spring, between mid- February and early June. Capitalizing on this market to get the best price for your home is just a smart move.
6. Transfer Base Taxes
Have you ever said to yourself, ”I can’t sell my house because my property tax base is so low, I don’t want to lose it”? Are you over the age of 55 or disabled? Did you know you can transfer your property tax with you to your new home? Proposition 60 allows transfers of base year values within the same county (intracounty). Proposition 90 allows transfers from one county to another county in California (intercounty) and it is the discretion of each county to authorize such transfers. Locally, Alameda, San Mateo and Santa Clara County are counties that accept the tax transfer if you are 55 years of age or older. Proposition 110 provides transfer of property tax if you are disabled. These three Propositions were put in place to help seniors avoid being trapped in a home because they could not afford to move due to higher property taxes on a new home. By taking the base tax of a primary residence with them, older homeowners can make the move with less financial hurdles. thus also making move up homes available to new home buyers.
Here is more information about Propositions 60-90-110: http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#2
7. Washington’s New Administration
The likely political changes as a result of the Trump administration could have an impact on both buyers and sellers. “Trump basically made his campaign oriented around uncertainty,” said Ralph McLaughlin, chief economist at Trulia. Sellers who don’t want to wait to see “how it all turns out” may decide now is the time to cash out, which will place more inventory on the market, which will lower prices.
f you would like to have one of our agents run a CMA on your home and discuss the market activity in your neighborhood, please contact us today!