Ask any agent in the major metro areas of California what the hardest part about the market is right now and every single agent will tell you the same thing – no inventory. Houses are flying off the market within days, with most receiving multiple offers pushing the prices higher than list price. Constant bidding wars are occurring across the state. What does this mean, and how can you manage tobuy a homein CA in today’s market?
Nationwide, bidding wars are showing signs of losing steam, with 61% of offers being put into multiple offer situations, down from 63% in March 2014. However, in places like San Francisco and Sacramento, 94% and 81% (respectively) of homes are entering into multiple offer situations. What’s more is the scary fact that 72% of homes in San Francisco are selling for over asking price. In San Diego,the median home priceof $4758k has surpassed the median from August 2007, $475k, still lower than the 2005 median price of $517k though.
Extremely low inventory seems to be the main cause of these bidding wars. This is apparent when considering that the total number of home sales is only increasing by about a couple percent, 2% in San Diego County over the past year. Prices climbing and inventory shrinking, coupled with interest rates continuing to remain at all-time lows, results in an extremely competitive buyers’ market. This means Agents need to stay creative and Buyers need to stay confident and patient.
Agents have had success winning over other offers through numerous methods, some ofwhich includedetailed cover letters (43%), waiving inspection (20%), waiving financing contingency (15%), or paying in all-cash (11%). These are tools that buyers need to be made aware of and get comfortable with when entering the CA real estate market. Buyers should remain confident though, as California has shown its resiliency with every increasinghousing demands. With interest rates staying so low and the CA market keeping strong, it’s still a great investment when purchased correctly.