I'm looking at the real estate sales activity for April and even though we're only 10 reporting days into the month, some numbers could indicate CHANGE is beginning to happen. 🧐
In Sacramento County, as of Good Friday, available inventory is up 45%. Closed sales for the first 10 days compared with the first 10 days of March (which was prior to Covid19) are down 26%. NOT surprising because transactions are taking longer to close, as lenders throw a few curve balls to buyers desperately trying to close on their new homes. Pended sales are also down 35% over last month - most likely due to the PAUSE the world has taken on everything, including the purchasing of a home.
For the first time since 2010, months of inventory, (which is one way we measure Supply and Demand) is up to 5.4% -- meaning if not another home came on the market, it would take us 5.4 months to sell what we currently have. May I suggest that this number will continue to climb, as homeowners realize that we may have seen the peak of our market when it comes to values.
Not to be a naysayer... heaven knows I'm usually Polly Positive, but change is happening right before our eyes. I don't pretend to be an economist and my crystal ball has been broken for a LONG time! But... as I've said before, I pay attention to numbers. As people are waking up this morning, I'm sure some are concerned about the fact that we're only half way through our 'shelter in place' orders. Many have bills due and perhaps don't have three months of reserves in case this continues to spiral.
If you've got money in your savings, perhaps are retired and set for life, I truly am happy for you ... but you're not the ones I'm concerned about.
If you're not retired, but instead were living your best life and now find yourself wondering 'how's this going to turn out', you need to take a deep breath and realize that you have options.
If you are a homeowner that has suffered a job loss, or maybe you're not 100% certain how your job's industry will recover from this crisis... and you don't have a nest egg large enough to make it to the finish line (whenever that might be), YOU are the group that I think should be asking yourself a few questions.
You may not want to consider selling your home during this time. I understand and agree. It’s not ideal for anyone under the new guidelines that we have to adhere to; but, if you know you have equity and don’t know how long you can hang on… this may be the time. I’m not saying it’s your only option, but it’s an option. Many times people sell their homes at the peak of the market and take their equity to either reinvest down the road in a new, more affordable home OR perhaps use the equity to pay your bills, while you rent for a while. Either way -- it’s an option to consider.
The good news is this -- if you've owned your home for a few years, you have equity! That's the one differentiation when comparing this downturn from the last downturn. Odds are you haven't used your home as a checkbook, siphoning all of the profits out every six months. You learned (nice job) from the last crash that it's good to have equity, in the event you need (or want) to sell.
None of us can predict the future! IF someone tells you they can - run! These are unprecedented times... we know that. The difference is that this time you may have options. It's scary - I understand and agree - but most times people are not rewarded for waiting to "see what happens", because by that time, others will react, too. We watched that in the 2007 market. By the time the world figured out that the financial markets weren't sustainable, it was too late. A flood of inventory came on the market and poof -- the market shifted to a buyer's market and it was game over...
I'm not trying to be HENNY PENNY, the sky is falling! I'm simply trying to give an advanced warning that more inventory WILL be coming on the market. That’s a given... and it's not just the spring selling seasonal inventory. Will prices adjust? Probably, because as supply increases and demand decreases, that will have an effect. That’s basic economics.
The good news for buyers is, “More Inventory Is Coming and Rates Continue To Be Amazing”! Home ownership has and will continue to have many advantages. We will still see, and are seeing, homes selling. It’s the American Dream and having a home means more now than ever before.
But, there are a few things you may not have thought about.
There are a series of questions I'm going to pose to my clients this week in our e-newsletter. Questions to make you THINK. Questions to make you ACT, if it's appropriate. Most times in a shifting market, what I hear most often is, "if I'd only known that was going to happen, I would have responded differently." These questions aren't fear-based -- they're fact-based as of today. For any of us that have been through this before, we can honestly say -- this is new uncharted waters! But it doesn't take a rocket scientist (or a college educated economist) to see that when millions of people have filed for unemployment, businesses are closing for good, people are opting for forbearance which is only buying them a few months... and we're still supposed to stay home -- It may be time to do something!
If you're on our e-newsletter, watch for it this week as we ask you, "random questions you might not have asked yourself yet."
We're here if you need us ❤️ #KelloggFamilyRealEstateTeam