Home values in the Bay Area (and all over the country) have been rising faster than we’ve seen in years. While this is great news for homeowners looking to sell in the near future, it’s making some buyers a little nervous. These buyers wonder, “What if the market crashes right after I buy a home?”
Let us put your mind at ease. We might not have a crystal ball, but we can examine current market indicators to predict how the market will behave in the coming years.
What the Current Market Tells Us About the Future Housing Market
Comparing housing market data from July to housing market data from earlier in the year shows us which direction the market is moving.
Take the Oakland market, for example.
In July 2021, prices were up an impressive 14% year-over-year, but this is a slight decline from the 16.6% we saw in May.
The average Oakland home sat on the market for only 14 days in July, but this is slightly longer than the 13 days we saw all spring.
Only 11.2% of listings dropped their price in July 2021, but that’s still higher than the 6% we saw in April.
This data indicates that the buyer frenzy seems to be slowing to more sustainable levels. Each submarket is unique, but most Bay Area submarkets are seeing a comparable shift.
So When Is the Housing Market Going to Crash?
Based on the market data from the past decade, we can be fairly certain there won’t be a market crash at all. And this professional opinion is shared by the majority of real estate experts.
Headlines often imply that rising home values mean there’s a housing bubble that will burst. But rising home values don’t necessarily mean there’s a housing bubble. A housing bubble is caused by factors outside of supply and demand. For example, the housing bubble we saw early in the 2000s was a result of irresponsible lending practices. This led to homeowners owing more than they could ever reasonably afford to pay back, often on multiple properties.
Today’s rising values are driven by legitimate supply and demand factors. So instead of creating a bubble and an impending market crash, our market is creating slightly inflated home values that will slowly correct themselves to fair market values over the course of several months or even years.
The important thing to remember is that the market may not be in danger of crashing, but it also can’t last forever. So savvy buyers and sellers are capitalizing on these conditions while they can.
How You Can Take Advantage of this Market
If you’ve been thinking about buying or selling, you can take advantage of these hot market conditions while they last.
For sellers, all you need to do to capitalize on this market is list your home with an experienced real estate professional. Many listings are still getting multiple offers, favorable terms, and even bidding wars. A REALTOR will know how to best position your home on the market to maximize profitability.
For buyers, you can take advantage of today’s low interest rates, which boost your purchasing power by allowing you to spend more on your home and less on mortgage loan interest. Plus, no one can tell exactly how long this growth will last or how much prices will increase over that time. Yes, you could wait until the market cools into more of a buyer’s market. But are you willing to wait for an unknown period and risk paying even higher prices?
When you’re ready to buy or sell, the team at Sequoia Real Estate is here to give you professional guidance with world-class service. Contact us today for a free, no-obligation consultation.