After the longest economic expansion on record, there are signs that the economy is shifting and the housing market in the East Bay is softening. Data from Altos Research, who tracks the real estate market in real time, showed homes over $1.3 million are sitting on the market longer and more inventory in the upper price range is appearing on the market. The Federal Reserve lowered the interest rates last week for the first time in ten years making home financing more affordable. Trade wars are impacting the availability and pricing of construction building materials for homes across the country. Is this the time to sell or hang on until the spring 2020 market?
Signs of A Slowdown?
“Housing markets across the country are already heading into a potential correction a solid year before the overall economy is expected to experience the same. The current housing slowdown is in some ways a return to balance that will help increase the resiliency of the housing market when the recession does arrive.” Skylar Olsen, Zillow Director of Economic Research.
But even if a housing slowdown isn’t the cause of the recession, the housing market will likely feel the impact. Just over half of the panelists of a recent Zillow poll expect home buying demand will be somewhat or significantly lower in 2020 compared with 2019, while only 17% say it will increase.
A Federal Reserve economist says the current housing backdrop is similar to recent economic slumps, with several metrics “consistent with the possibility of a late 2019 or early 2020 recession.”
According to a CNBC article regarding a possible economic downturn, there are mounting signs that global weakness and business concerns over tariffs could hamper U.S. growth or cause an outright recession. Chances for negative growth by May 2020 are at 29.6%, up from 27.5% in April and the highest level since May 31, 2008, just as the financial crisis was set to explode in September.
With these economic signs in mind, if you are considering selling your home within the next year, do you rush to put your home on the market in the fall or wait until the normally busy spring season to capture the highest value for your home?
“We are currently seeing homes priced at $1.9 million and higher sitting on the market for over 60 days right now,’ stated Tracy Sichterman, Broker/Owner Berkeley Hills Realty. However, overall the market is still firmly a sellers market, according to Altos Research, as the East Bay continues to experience a higher demand for homes than there is availability. “We recently helped complete a renovation on a listing in Berkeley and there was a bidding war and the home went for well over the asking price,” Sichterman shared.
But, Wait. The East Bay Is Different
The looming economic downturn will affect housing markets in the various regions of the country differently than others.The Bay Area job market recently set new records, desirability of the Bay Area continues to be a draw, and the desire to buy homes continues to outpace availability. “The East Bay real estate market is one of the hottest in the US due to the lifestyle we enjoy here,” Sichterman shared. Will sellers in the higher end price range perhaps have to wait a little longer to find the right buyer? Maybe. Will the market experience a rapid price decline between fall and spring. Not likely.
Low Mortgage Rates Could Help A Strong Fall Market
A caveat is if buyers are planning to finance, there is good reason to think mortgage interest rates have hit bottom, so smart buyers are not waiting until the spring for housing prices to potentially fall, only to find they can afford less house. Smart buyers, in hedging their bets against a downturn would be looking to buy from now until the end of the year.
We can sit down with you and discuss your goals and ascertain a successful selling strategy for you based on your home’s location, a boost in list price with a design renovation or timing of existing inventory coming onto the market. We look forward to working with you.
Research, as the East Bay continues to experience a higher demand for homes than there is availability. “We recently helped complete a renovation on a listing in Berkeley and there was a bidding war and the home went for well over the asking price,” Sichterman shared.