The world we live in continues to be a very strange place. So many things are happening at once, it is mind boggling. We have the pandemic, working from home, over 40 million unemployed, businesses closing, divisive politics, China, and an election on tap. Just weeks ago we hoped that “normal” was coming into focus, but now we are sliding backwards in terms of COVID-19, school plans, and workplace restrictions.
As you can imagine, I get a lot of questions about where things are going and we aren’t just talking real estate. If you have followed my client letters, you know I spend a lot of time analyzing the macroeconomic and political environments. It’s fun reading, really. I like to go from a helicopter view down to ground level and think how it affects my clients, the localized real estate market, and our national economy.
Given the recent doom and gloom, you may be surprised to hear that our real estate market is explosive and has been since May. This is firmly a seller’s market and prices are increasing. This market is very similar to what we saw in 2004-2007, which I can say because I was there and have the T-shirt to prove it. Active listings are getting multiple offers over asking within hours of showing the home. Buyer competition is fierce. I just had one buyer offer $20k over asking without blinking on a house that had 18 offers in two days. Yep, it’s like that. And surprisingly, most appraisals are coming in to support these valuations.
The reasons why we have an exploding market are very clear. We have ultra-low interest rates (30 year under 3%), a very limited supply of homes, and a growing work-at-home contingent that has new buyers coming to our valley in droves. Why would you pay almost $3000 for a condo in Orange County when you could have a home with a pool out here? I haven’t seen so many first-time home buyers in years.
In my May client letter, I predicted that our market would do a dramatic shift into a seller’s market and push up pricing. However, this current market has exceeded my expectations and I do not see it slowing down any time soon. Even the 55+ market is on a tear. As of today, The Colony in Murrieta has 2 active listings and 18 homes in escrow! That’s just nuts and it means that I need more listings! So if you know someone who is considering selling, please send them my way and let me get them the maximum possible!
Is this all a real estate bubble? Maybe, but with low, fixed interest rates it is not like 2008. Anyone locking in a home at these low rates will prosper significantly over time because rental rates are incredibly high and getting higher. For the next few months I anticipate a leveling off of this hot seller’s market and maybe a little more equilibrium in October. Unemployment, COVID, and the election are the things to watch. As always, please contact me if you or someone you know has any real estate needs. My business is based on wonderful referrals from you and they are much appreciated!
Stefan West, aka Mr. Murrieta.