There are 2 massive problems contributing to the challenging bay area housing market right now. These aren’t exactly new problems, but with them both happening not just simultaneously but continuing for an extended period of time it’s definitely creating a real estate fatigue of sorts for not only buyers and sellers, but also real estate agents trying to help their clients. And I know some of you watching will wonder why not just wait out this crazy market? Well, life circumstances don’t always make it possible to wait and there are also some other reasons why buying or selling now makes a lot of sense.
I’m going to dive deeper into these two issues and give you some suggestions for navigating this market if you’re planning to buy or sell now.
The two big problems we’re seeing are the climbing home prices and the lack of inventory.
The bay area is an expensive place to live and that’s nothing new. It has always been comparatively more expensive than almost anywhere in the country. Except maybe New York and Hawaii, but even that’s changed. And while the pandemic has made a handful of the most expensive area of the Bay, like San Francisco and Silicon Valley, slightly more affordable as far as rents go… Home sale prices have exploded to new levels we haven’t seen before.
As the home prices skyrocketed you might think that homes would be sitting on the market and not selling, but this couldn’t be further from the truth. In fact, they’ve been selling faster than ever with bidding wars driving up the prices even further. How is this possible? Well, lack of inventory is the main factor coupled with low interest rates.
While the media would have you believing a massive amount of California homeowners are selling to cash out on their new found equity to take advantage of the opportunity to relocate to lower cost of living states, the lack of inventory indicates most are staying put. Perhaps instead taking advantage of historically low interest rates and refinancing their homes for lower payments instead. This is creating a situation where we have very low available inventory and more buyers looking to buy than there are homes available for sale.
You might be wondering…why would anyone want to buy in this expensive, over inflated market? Why would they just not wait it out? Well, sometimes life circumstances don’t afford the option of waiting out a market. Especially when there’s no guarantee on when it will level out. And an even bigger issue is if interest rates increase they may not be able to afford the home they want even if the prices come down a bit.
You see, buyers are facing a financial balancing act right now where the price of the home is only part of the equation.
So if you’ve been considering buying a home and want to take advantage of the low interest rates, where do you begin?
First of all find a local agent to work with who understands how to navigate this market. Who is creative and has the ability to think outside the box to not only find you the right home, but also give you the best chance at getting your offer accepted.
If you aren’t already working with a lender to get pre-approved your agent should be able to provide you with a recommendation. Be prepared to get all your financial documents in order and turned over to your lender. The more documents you have ready the easier the process will be and the further through the process your lender can get you. In this market you want to at least get pre-approved and not just pre-qualified. In this competitive buyers market going through pre-underwriting might give you a small advantage when making offers. You’re going to have to go through the steps anyway so you might as well get it done ahead of time. Every little bit of advantage helps.
To get pre-approved you’ll need to provide your lender with copies of you most recent federal and state tax returns for the past 2 years.
And… perhaps before you start gathering these documents it’s a good idea to pull a credit report to see if there’s anything negative on there you can fix before you apply for your loan.
Maria D’Aura, Realtor® | eXp Realty | 925-400-8488