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The Real Estate Market Is Back! Or Is It?

March 15, 2013 in Blog

Real estate agents and sales managers everywhere are screaming it from the rooftops, “The market is back!  Isn’t it great?”    Homes are going on the market and being snatched up right away, sometimes within a day with multiple offers.  Cash is certainly king with cash buyers gobbling the good houses up right away.

Does that mean that the housing market is back?   Well, maybe.   The way I see it, we have a few things driving this frenzy.

  1. EXTREME lack of inventory.  I mean really, there are 108 total houses for sale in Fullerton and there are only 17 houses for sale in Brea.  17!!?  (As of 3/15/2013 11:00 am).
  2. LOW RATES – Everyone is trying to take advantage of the low rates.
  3. FRENZY – Once people started jumping on the “buy” bandwagon, everyone else followed and we reached the tippng point.

It’s a simple case of supply and demand. When supply is is down and demand is up, the prices go up.   Many professionals are comparing this upswing to the 2005 market when prices were climbing and buyers were snatching up houses like crazy.

However, there is a big difference between now and 2005; financing. Back in 2005 financing was the pricing up.  Financing was so easy to obtain and many people purchased their properties with 100% financing.  These days, the cash buyers are primarily winning the purchase game, often times paying more than what a property would appraise for.

So does this mean that we have hit the bottom and are on our way up? I am not so sure.   It seems more to me that we have a little bubble happening.  There are no homes to sell, everyone wants to buy and cash buyers are scooping properties right up. If there were more homes for sale, then would we still have this problem?

If everyone suddenly decides to sell or if the “shadow inventory“  that we have heard about for years finally hits then things may change.  Or, what if buyers have finally had enough?  It is so frustrating to constantly be one of 30 or more offers and sometimes folks just give up.  Any of these could change the momentum in the market.

The market changed almost in an instant; who is to say it won’t again?

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