Economically speaking, May was a roller coaster of a month. With the US in a trade war with China, the stock market flailing, and interest rates decreasing, the real estate market doesn’t know which way to go. Personally, I blame the Democrats and Republicans. Also, let’s blame Zillow, Redfin, Open Door, and home builders, too, just for good measure!
Due to the trade war and the stock market pullback, rates are the lowest they have been all year. This is great news for real estate as it creates more affordable loans and brings new buyers into the market. However, the current political situation is causing significant uncertainty. The lack of consumer confidence triggers a “wait and see” attitude, especially with first time home buyers or buyers burned in the 2008 financial meltdown. When we should be sprinting in a hot market, we are often jogging or walking.
Adding to the market confusion are Zillow, Redfin, and Open Door. All three have been buying and flipping local homes. Recently, a client of mine was offered $451,500 on a $475,000 listing. After Zillow’s fees the actual offer was $409,000. A far below market sales price like that has a huge impact for neighbors trying to refinance or sell their homes. Here’s another example. Redfin just flipped a home in West Murrieta and sold it for $460,000. My team just sold the exact model across the street for $527,000. These large variations in sales prices are confusing and frustrating to a buyer who may love a home but also doesn’t want to feel like they overpaid. It also impacts appraisers who are just doing their best to accurately determine what a home is worth. Unlike these companies, crushing home values is NOT what I aim for.
Home builders are also adding to the uncertainty and instability by using gimmicky programs to intentionally separate clients from their agents. This ensures that they control the transaction to maximize their profit. If you are even remotely considering buying a new home, please call me first! Home builder incentive programs sound GREAT but usually result in you paying a full 6% commission to sell your home at an aggressive price, which nets you less and lowers local property values. They promise incentives that are often worth thousands less than you could get by allowing the Mr. Murrieta Team to represent you. I assure you, while home builders may talk a good game, it is not your interests that they are serving.
To sum it up, May was a confusing month with varied market forces creating a spectrum of home valuations, making true values harder to decipher. Corporations are geared to maximize profits and are not on the side of the consumer. I look for this trend to continue as we go into summer, so please call me if you are considering making a move so I can give a complete picture of how this may impact you. Don't go shopping new homes without giving me a call because I can and will save you money or a minimum advise you completely free :)!