For many of you, the real estate market drop since the mortgage crisis has put your home sale on hold. With values down on average by 35%, it was hard for people to give up on the equity they had built over time and walk away with nothing or, at the best, a lot less equity than they thought they would have when it came time to sell. As a result, if you could make it through the tough times of this cycle and hang on to your real estate, you are feeling much better today about your valuation. If you haven't checked lately, call me for an update on what your property might be worth in this market. (Or you can go to this link http://2cidirect.com/home_values.asp and I will get you the information you need.)
The latest reports from zillow.com is that we still have 13 million homeowners (over 25% of all homeowners with a mortgage) across the country who are still not regained an equity position. The good news is this is down 31.4% from the 1st Quarter of 2012. Even better news is the way the report is calculated. Zillow does a good job of tracking trends, but any time you have a quickly moving market, it doesn't take into consideration those trends. So, when the market is jumping like it is, the trending is slow to report it. And, with values rising over the last 6 months as quickly as it has, I guarantee these numbers will be getting better the next time Zillow reports.
So, more of you have equity and because of that we are beginning to see more move-up buyers. Over the last 6 or 7 years since the crash, we have only seen "move-out" sellers. The only "move-up" sellers had a good equity position to begin with or had cash to make the investment and, many, held on to their existing homes to rent them until the market turned around.
Most people in real estate say that the number factor in valuation is location, location, location. While location is certainly important to your specific valuation, market cycles are determined by the basics of Supply and Demand. Let's look more closely at these factors.
Supply. This has been a key factor in rising values. During this period of time, because so many have negative equity and because our economy has not been producing enough jobs to drive down the unemployment rate home sales have been dominated by those who have been forced to move. Short Sale, Foreclosure, job relocation, death and divorce dominated the Sellers. As a result, there has been very little inventory on the market. In Ventura County, for Single Family homes under $1.0 million, we still only have apx. 1.1 months of inventory on the market. A normal market would have 2 to 3 months of inventory.
Demand. This has also contributed to rising values. As the economy and values have stabilized, so many first-time homebuyers that were sitting on the sidelines have finally decided it is time to jump in while times are still good and values are relatively still low. Secondly, any time you have a cycle that appears to be at the price bottom, smart investors will be sure to jump in and that has certainly happened with regard to the real estate markets. Investor demand has been high and that increased demand has made it very hard for normal sellers to compete with because they are usually buying with "all-cash".
So, with all that, why sell today if values appear to be on the rise?
First, interest rates over the last few months are up by over .5% and I have heard more stories than I would like to tell of buyers who did not have their loan locked, rates went up and now they don't qualify for the purchase that they were under contract for. This increase will certainly eliminate some from the market and, for the short term, should also cause a some to jump in thinking that the low rates are over and "I need to get something done now".
Second, as values continue to increase, you will begin to see more move-up buyers and as this happens, we will begin to see inventory levels rise. We have already seen that here in Ventura County. Month-over-Month, we have seen a 30% rise in Single-Family inventory levels just in the last 30 days for homes valued under $1.0 million. This increase in inventory levels will cause pressure on value increases as there is more options for buyers.
Third, investor demand is beginning to wane. With values up in Ventura County by 18% from a year ago and rents virtually stable (maybe up 2% to 3%) the returns for investing in real estate is much less attractive than it was 6 months ago.
And, lastly, there are always more buyers in the Summer months. This trend is true in most normal markets. While buyers don't stop during the holidays, many families that don't accomplish their purchase by the end of summer have a tendency to put it on the back-burner until the holidays are complete or until the next school year begins to wind down again.
All of these things say to me that this is a great time to sell your home. The market needs you. If you have been thinking that it might be time...it probably is. Now is a good time to sell, so call me today for a confidential evaluation of your home and your situation so you and your family can take advantage of this market.
