Well Mike, the real Real Estate guru, is out of town for the weekend and early part of this week, so it falls to his son (me) and squire of the trade to formulate the weekly Real Estate Update. I hope dear readers, you will be forgiving in the absence of the master.
The world seems to be suffering one crisis after another. From civil wars in Iraq and Ukraine, to widespread epidemic in Africa, there is no lack of material for the News Networks. Anyone following the financial industry knows that the last couple weeks have not been good to investors at large, which generally speaking means bad things for economy at large.
Some blame all of the messes we are seeing around the world for a lack of confidence in the market more than others, but all believe it to be a factor. Some are saying it is a temporary lull, a natural correction within a bear market. Others are saying it is the beginning of longer downturn.
Well neither I nor my father are financial experts, though we follow those pundits with an interest equal to the amount that it effects the housing market, which is quite a lot. What is the connection between the financial industry and the housing market? Well there are many connections but the one in particular that I wanted to touch on today is the advantage to the buyer.
Baron Rothschild, a long dead British mega millionaire, once said“The time to buy is when there is blood in the streets.” As macabre as that sounds, it seems there is truth there.
Why? One reason is mortgage rates. Interestingly, when the economy is doing poorly, interest rates tend to go down. We have seen that in the last week or two especially and today mortgage rates are the lowest they have been since June of 2013 at around 3.75%, something nobody was predicting early this year. Analysts were saying that by this time, interest rates would be as high as 5 or 6%.
Prices have begun to take a slight downturn in most areas of the Valley, mortgage rates are very low, inventory is high, and sellers are getting desperate. These are the times when buying is the most profitable. A buyer right now can expect a great selection, the upper hand in negotiations, a great mortgage rate, and ultimately a nice little discount off where prices peaked in November of last year.
For how long will this be? Well as Realtors we hope not too long, ideally you never want to see the balance swerve too far towards buyers or sellers. (Ok to be honest most homeowners love super seller markets, but the problem is those never last)
So if you are hoping to buy a home soon, like my wife and are, everyone else’s bad news is good news for you today!
Now I know it was just about a month ago that we reported things were looking up for sellers, and indeed they were. Inventory was shrinking and the fine balance between seller and buyer advantage was inching back towards sellers. Well the trend has stopped and has again been sliding back towards buyers.
Ultimately though today we are really still in a balanced state. The advantage, definitely to buyers in my opinion, but not wildly.