How to Navigate the Shifting Housing Market
It's undeniable that the real estate market has been hot over the last couple of years, with low inventory across the boards and high competition among buyers. However, the market is clearly making a shift.
After three years, the inventory of homes for sale has finally increased for the first time since June 2019, with newly listed homes up 6.3% nationally compared to a year ago. Locally, here in the Silicon Valley area …. year over year, new listings slightly decreased (by 17 homes - less than 3/4 of a percent) but pending sales went down 18% overall.
If you are in the market right now, you can tell it is in the process of making a noteworthy shift. It's still a seller's market right now, but for how much longer?
As a first-time homebuyer or even a seasoned homebuyer, it's important to keep up with the shifting market trends in order to secure a successful transaction.
Read on to learn more about the shifting real estate market and discover how to better navigate these changes.
What Does the Shifting Market Look Like?
In May 2022, Realtor.com released some housing data that revealed some major turning points in the market.
In terms of inventory, the data shows that the number of active home listings entering the market is higher than it's been since 2019.
Nationally, the inventory of active home listings has increased by 8% over the past year, amounting to 38,000 more active home listings compared to May 2021.
Locally, here in the Silicon Valley area …. Inventory is actually still 9% lower than the highest inventory month in 2021, July … 38% lower (a whopping 1,451 homes) than its height in June of 2019 and 79% lower (almost 9,000 homes) from its peak in 2008.
While having more homes on the market is good for buyers, homes are still spending less time on the market compared to this time last year, and home prices are still up 5.4% since January of this year.
The market is definitely shifting, but not necessarily in a buyer's favor just yet. Interest rates are continuing to rise. These rising interest rates coupled with all-time high listing prices have increased the cost of financing compared to a year ago.
For example, the average listing price in Santa Clara County for active single-family home listings in May 2022 was $1,536,000. This is up 11.7% compared to May 2021 and up 28.4% compared to May 2020.
This may cause frustration for first-time homebuyers because while more homes are being listed on the market, many are still more expensive.
Tips for Navigating Market Shifts as a Buyer
In addition to partnering with a local, expert real estate agent, utilizing the following tips can help homebuyers better navigate continued market shifts.
Know Your Budget
With rising mortgage rates and increased home prices, it's essential to do your homework and plan what you can truly afford in advance. In a seller's market, you should be prepared to pay the asking price.
However, it is essential that you make buying decisions based on your finances and not on your emotions. Just because you can financially afford to pay over the market value of a home doesn't mean that you should or that it's in your best interest over the long term.
Get Preapproval From a Trusted Lender
Along with having a thorough understanding of your budget before buying a home, you should obtain a preapproved loan with a trusted lender. Getting a preapproved loan signals sellers that you are a serious and reliable buyer.
Be Flexible and Patient
A final tip for first-time homebuyers navigating today's market shifts is to be flexible and patient. There will undoubtedly be ups and down on your homebuying journey, especially with today's market and continued market shifts.
While there will be ups and downs, just remember that buying a home is still within reach, and when in doubt, always reach out to a local, expert real estate agent for help.
Tips for Navigating Market Shifts as a Seller
While the market is shifting, it's still a good time for sellers. The following tips will help you get the most out of your home selling experience.
Work With a Trusted Local Real Estate Agent
Even during a seller's market, it's important to work with a local expert real estate agent when listing your house.
An experienced local real estate agent will be able to give you the most up-to-date information on the market, navigate stressful contracts, and help you get the best price for your property.
Perform Inspections Before Putting Your Home on the Market
It is always to your benefit to have a pre-inspection completed on your home before you list it on the market. Having a pre-inspection can save you a ton of time, headaches, or delays down the road.
The market has favored sellers over the last couple of years. While shifts in the market are occurring, the market still resides in favor of sellers. The good news is that there are more active listings on the market today than earlier in the year. Whether you're a seller or a buyer, the best way to navigate and stay on top of these market shifts is to understand the current data and previous historical trends.