What a weekend we are having! We have lots of rain, big booms from Camp Pendleton, and it is Super Bowl weekend. I traditionally do not talk religion or politics, and for many people football is a religion, but I can’t get behind this Super Bowl. Yes, both teams worked hard but both also had a lot of ref help.
Now you may be thinking, why is my real estate guy writing to me about his Super Bowl angst?! Well, in many ways it is very similar to our real estate market. As a homeowner, you can increase value by upgrading your home with a pool, solar, new kitchen, etc. You can also create wealth by aggressively paying down principle or refinancing to a 15-year loan. However, as with championship football games, there are many things outside of your control regarding the market value of your home.
One of the biggest “refs” that dramatically impact our market is the Federal Reserve. Last week, they decided not to raise interest rates. This affects a myriad of things including consumer confidence, the stock market, interest rates, and even consumer cash flow as it stabilizes credit card rates after they have been on the rise for months. By keeping rates low, it spurs higher buyer activity which will reduce the supply of homes on the market. Low supply amid high demand means that this spring your home will be a winner.
We are already seeing a shortage of supply play out with homes $425,000 and under. When interest rates dropped down, home sales really start to pick up. When you are out showing homes in Murrieta and can only find 8-12 homes in total for new buyers, you know things are tight. When five of the homes go into escrow within the same week, you know the party is just getting started. Next up, offers over asking!
This means that between now and June will be the ideal time to sell. Usually, we would see this trend start in April, but the large decreases in rates and increase in consumer confidence are pushing things to an early start this year. Tax plan returns in April will likely further invigorate our local real estate market.
The Federal Reserve is always a factor but for some reason, this one call last week really had a much larger impact that usual. The timing was just right with the trade war, government shutdown, and lots of politics going on, thus my NFL analogy. One call at the pivotal moment can mean everything! Fortunately for homeowners, the Fed made the right call at the right time. Please let me know if you or someone you know needs help. As always, I appreciate your referrals!
Stefan West aka. Mr. Murrieta