For buyers and sellers, the recent downward shift in the housing market is fertile ground for potential missteps, bad reads, and unforced errors.
Buyers can overreact about how much the market has shifted. Meanwhile, sellers have a tendency to enter the process with unrealistic expectations about listing and selling prices.
Decisions made under duress are generally based on fear rather than fact. Home sales are huge transactions, and as such, it’s critical for both sides to use a process that is data driven and informed by the reality on the ground.
As real estate agents, we are ultimately responsible for providing our clients with the best advice using the best information available from every reliable source. This ensures that they make the best decisions to get them where they want to go, and it’s how I approach my work.
By March of this year, the housing market had already become very frothy. Fear of missing out (a.k.a. “FOMO”) was very prevalent, while the risk of overpaying was growing every day. That’s why I recommended that my clients avoid putting any offers down at least through May, until we had more information to guide our decisions.
One client who decided to wait was able to get a house at the end of May for almost 10-12% below market value in a really nice area of Sunnyvale. Unfortunately, I later found that some clients decided to get into contract with other agents in late April/early May. When I compared what these buyers paid to the true value of the homes, my heart sank. But I understand the pressure that an unstable market can put on buyers — as well as sellers.
Around the same time, I was urging seller clients to get their houses on the market as soon as possible before the market cooled off completely. For one client in Pleasanton, the timing was perfect, and they got a preemptive offer at 12-13% over their asking price. By the following week, prices had already taken a plunge.
As is always the case, some areas are impacted more than others by shifts in the market. Generally speaking, the further you get away from the center of the South Bay (Mountain View, Los Altos, Sunnyvale, etc.) and into surrounding areas (South San Jose, Morgan Hill, Berryessa, etc.) the more value drops. The graphs below illustrate this point.
Trying to time the market and targeting a specific area can be risky because peaks and valleys can come and go in the blink of an eye. That is why it’s important to let an expert guide you during this process.
The good news is that both sellers and buyers are slowly coming to terms with the downward shift in the market and adjusting their expectations. For the first time in months, we are reaching a more predictable space, and it should become even more stable over the next 2-3 months.
You don’t have to take your real estate journey alone. Give me a call to talk about your goals, and we’ll see if the timing is right for you.