The residential market nationwide is beginning to relax and change, according to Ryan Judson, a realtor with Compass Inc. in Encinitas, California. “As we look across the nation, we are beginning to see many markets settle down and shift from a seller’s market into a more neutral/normal market — one where neither buyers nor sellers have a significant advantage over one another,” Judson says in a release.
Addressing the San Diego residential market in particular, Judson adds that as rates slowly rise and inventory increases, sellers can no longer get away with overpricing their home. “They can, however, still fetch a premium, but proper marketing and pricing strategy is key,” Judson says.
Buyers in the San Diego market now have more options to choose from and may even be able to get a better price by not having to compete with multiple offers as homes are begin to take longer to sell, Judson says. “We are also seeing an increased number of price reductions throughout the county. Although up from last year, rates are still historically low.”
Sales figures do seem to be on the rise, even though they are below their potential. A report on BusinessWire from Santa Ana, California–based First American Financial Corporation shows that potential existing-home sales increased to a 6.13 million seasonally adjusted annualized rate, a 0.8 percent month-over-month increase. The rate represents a 67.4 percent increase from the market potential low point reached in February 2011. The report says the market potential for existing-home sales increased by 2.9 percent compared with a year ago, a gain of 171,400 sales, but currently, potential existing-home sales is 1.16 million or 14.9 percent below the pre-recession peak of market potential, which occurred in July 2005.
Judson notes that interest rates for 30-year fixed rate mortgages rose for the second consecutive week and are up three-quarters of a point over the same time last year, according to Freddie Mac’s Primary Mortgage Market Survey for the week ending September 6. “Freddie notes that investors are optimistic about the economy’s strength in spite of rising borrowing costs,” Judson adds.
He also says that according to Black Knight Financial Services’ latest MortgageMonitor Report, the amount homeowners can borrow to keep their mortgages at or below 80 percent of the total value of their homes has reached an all-time high and that “tappable equity” grew by $256 billion in the second quarter and now totals $636 billion nationally
The job market is also in favor of applicants, Judson notes. He says the latest Job Openings and Labor Turnover Survey from the U.S. Department of Labor showed open positions at a record high. “While economists note that labor demand could lead to wage growth, there are also concerns that lack of ‘worker supply’ could slow overall economic growth.”