Real Estate Update: You won’t hear this on the news

Real Estate Update: You won’t hear this on the news

You won’t hear this on the news, at least not yet.

If you have been thinking about selling your home the time is now.  That’s because the window for you to maximize profits is inevitably closing.

According to data published by First Tuesday, a real estate forum for industry professionals, the market advisory is officially shifting from a “hold phase” to a “sell phase.”  Cash in on the record gains before they erode away in the next market correction.

Here’s why we are confident in signalling the sell phase:

  • Still rising prices
  • Economic WOW factors (see below)
  • Rising interests rates
  • Economic indications that foreshadow an upcoming recession
  • The relationship between low sales volume & lack of inventory

1.  Lack of inventory & Rising prices

This one sounds like it should be on your side as a homeowner, and it has been.

However, the current lack of housing supply alone cannot prop up the market forever.  Actually in the long-run, continually low sales volume does not bode well for the value of homes.

Combine this data with increasing interest rates, and suddenly the purchasing power of people looking to purchase your home diminishes.  It’s a trifecta.

2.  Prices still rising for now

You already know what I’m about to say, don’t you?  Sell now, at the high-water mark.  At the previous market-high around 2007-08, homes in my Bay Area neighborhood were peaking around $750,000.  These values were previously never seen before… now we’re double that.

Then one day as a nation we focused on a President that introduced us to our new adversary.  Into the room walked a nemesis called the Global Financial Crisis.

That year our neighborhood values dropped nearly in half.

The lesson learned… because in real estate no market condition is eternal.

3.  The WOW factors

(1) Global politics and your home value are correlated.

Currently in effect, President Trump is enacting political negotiation tactics such as tariffs with China.  And better yet, did you also know that Beijing began to enforcing tighter restrictions on outbound investments last year?

Per the Los Angeles Times:

There was a 55% drop in new Chinese investment in U.S. commercial real estate in 2017 compared with the year before, as spending fell from $16.2 billion in 2016 to $7.3 billion last year…

The percentage drop in those numbers are significant!

(2) Back at home, we have some economic concerns as well.

Specifically, let’s set our sights upon the “Tech Industry.”  Tech workers and their employers are the ones playing a dominant role in Bay Area home purchases and valuations.  The HUGE concern is that these jobs are tied to wall-street.  And potentially even worse, would you believe that these would-be homeowners are using their stock portfolios as qualifying income for home loans!

Right now stock-as-income helps many tech workers qualify for huge home loans.  So far this is working out great for both sides.  But for how long?

We all know what happens when we link our fortunes to Wall Street and potential global economic volatility.

Bottom line is that a decline in “Tech Stocks” may influence the desirability and value of your home much more than traditional salaries & incomes of workers.  If that doesn’t scream bubble-economics then I digress.

Sell Phase Green light

Your choices are very clear:

  1. Hold on and wait for the next phases of recession to come and go.
  2. Set a firm timeline; selling in the next 6-12 months is a solid game plan to capitalize on equity gains.
  3. Or if you’re not yet a homeowner, position yourself for the next recession phase… become a contrarian… buy low and sell high in order to win the game.

In conclusion, let’s just stop for a second and be really honest with each other… you’ve possibly been looking at one of the best times to sell in the entire history of real estate.

Are you ready to make that adjustment or are you holding on?  You can expect the bidding wars to come to an end, in fact they already are.  But you won’t hear this on the evening news – at least not yet.

Areas like San Luis Obispo and Santa Barbara are centrally located in the state and provide beach style living.  Real estate market conditions in these areas have already started to shift.  The local economies are already currently turning from seller dominant markets to buyer’s markets.  This means the odds are already in your favor for the switch.  These are desirable locations within California with lower barrier of entry and great for retirement.

Let’s continue the discussion online or via email!

Chris Funke is a Bay Area native that offers real estate solutions to his clients.  His experience as a licensed administrator for Senior Living Communities led him to offer 1% listings to his clients, saving them money and providing extra funding during transitional phases.  This is a deal he continues because he’s honored to help families maintain equity while transitioning homes.  He is the marketing and sales director of NGN Realty with team members representing Santa Clara County, Fresno, San Luis Obispo, Avila Beach, Pismo Beach, Santa Barbara as well as across Southern California.

Chris@teamfunke.com
NGN Realty
Lic#01966350

 

Reference:

http://www.latimes.com/business/la-fi-chinese-investment-falls-20180327-story.html#

http://journal.firsttuesday.us – Economic indicators signal a sell phase for real estate

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