2016 Home Buying Season in Full Swing

The home buying season of 2016 has kicked off in Southern California. Spring and summer are traditionally the busy seasons for home sales. There are several reasons for this including families looking to relocate into a new neighborhood, move into a larger home, downsize or upgrade their features. Whatever the reason(s) are for buyers and sellers, they typically enter the market between April and October throughout the United States.

There is no doubt that the market is competitive right now as supply remains constrained and demand is strong. The imbalance between supply (decreasing) and demand (increasing) places upward pressure on home prices. The Statewide median home price in California broke $500,000 for the first time in nine years according to the California Association of Realtors (CAR). Below are variables that affect prices with data provided by CAR and Fannie Mae.

Inventory: the supply of available homes on the market is operating at 60% of normal levels. There are fewer homes on the market.
Mortgage Rates: The 30 year rate for a mortgage is 3.58% as of May 2016. The rate was 3.84% this same time last year. Debt is cheaper than historical averages thus pushing more buyers into the market.
Sales to List Ratio: 99.3%. Tight inventory and strong demand means home buyers are essentially paying list price for homes.

This is all great news if you want to sell your home as you will likely get multiple offers from strong buyers. The time right now is what we call a “seller’s market”. If you’re a buyer, then this time can be more challenging to get what you want. Buyers should expect to put their best foot forward with their initial offer and don’t expect Sellers to give large concessions during the transaction. Here are some tips for Buyers right now:

Save more money for a strong down payment. The larger the down payment the stronger your offer appears.
Do not ask the Seller to make small, miscellaneous repairs to the property. Don’t ask for all of the appliances if the Seller doesn’t want to include them in the sale.
Pay your own closing costs, which will be roughly 1-3% of purchase price.
Be willing to pay the difference between appraised value and purchase price if there is a discrepancy in value.
Be flexible and compromising!