I’m forecasting falling home values, and this summer breeze on the cooling market should make buyers feel fine!
My oh my, a lot can change in a few months. At the beginning of the year, home prices were rising at an unsustainable 4% per month and selling faster than ever before. And then a war broke out! Needless to say, Russia’s war sent shockwaves around the world & we’ve all been impacted by the war’s economic ripple effects (gas prices, food costs, interest rates, etc).
The typical red-hot summer real estate market has changed too. Sellers have watched buyers become more hesitant due to the fastest rise in mortgage rates since the early 80s.
As a result, 30% fewer home sales have occurred this month compared to the same time frame in 2021. This significant decrease in volume will force motivated sellers to drop their prices to attract a buyer, and eventually this momentum should lead to declining home values by summer’s end.
Some may read those figures and suggest this post’s musical title be changed to “Cruel Summer” or “Summertime Sadness.” But they would be wrong. Rather, this cooling “Summer Breeze” is simply returning the market metrics to pre-pandemic levels. We are approaching 7,000 homes for sale in the Sacramento market, a similar amount we saw in the spring of 2020. This equates to 2 months of housing inventory on the market, again a comparable figure seen before the pandemic.
For some, this market slowdown is wonderful news! A more balanced, normal market will lead to more opportunities for first-time buyers. With younger Millennials now hitting their late 20s/early 30s, there are literally millions of them looking to purchase their first home. This will help soften the fall for home prices, particularly for lower priced homes.
If you have been considering a home purchase, now is the time to get prepared for buying opportunities! You have more options, sellers are more eager, and prices are no longer increasing. Give me a call to discuss ways to best capitalize in today’s market as a home buyer.
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