This holiday advice is not the best recipe for wanna-be homebuyers
The housing ecosystem has an overabundance of statistical harvesting.
Question: We are conflicted. My wife and I want to buy a Bay Area home. When home loan interest rates drop, we will home shop. The loan officer says, “Buy now.” Our realty agent wrote, “Do not postpone.” Family members instruct us to wait. Holiday gatherings are upon us. We’re facing more homebuying advice. Realty professionals stand to gain. Family members gain nothing. Experience favors our realty team. Our family members rarely buy homes.
First-time homebuyers receive conflicting advice. We have known this for years. It must be commonplace. If so, which group of advisers do we follow in our situation?
Answer: First-time homebuyers are awash in solicited and unsolicited advice. That is a fact. It pays to take the conversation up another level. Real estate economists and housing trackers share thoughts and statistics thanks to the World Wide Web daily or weekly.
The housing ecosystem has an overabundance of statistical harvesting. Let me prune a few words of wisdom from the housing experts who farm the statistics daily:
The chief economist at CoreLogic shared a post on LinkedIn referencing her November 14, 2023, HousingWire article, “Opinion: CoreLogic’s Selma Hepp on the effects of ‘pandemic migration.’
“Again, while San Francisco metro (which encompasses San Francisco city/county and San Mateo County) saw an increase, home prices in San Francisco city alone were down 1% since the onset of the pandemic, while they were up 32% in suburban Contra Costa County.”
In a National Association of Realtors (NAR) November 15, 2023, press release, “NAR Chief Economist Lawrence Yun Forecasts Existing Home Sales Will Rise by 13.5% Next Year and Mortgage Rates Will be Between 6-7% by Spring 2024”
Yun analyzed the current state of the U.S. residential real estate market and shared his 2024 outlook during the Residential Economic Issues and Trends Forum in Anaheim, California.
“Lack of inventory is providing the support for high prices, but it’s also making it super difficult for first-time buyers to enter the housing market.”
Yun said the 30-year mortgage and Fed funds rates have likely crested.
“I believe we’ve already reached the peak in terms of interest rates,” Yun said. “The question is when are rates going to come down?”
On November 17, 2023, the California Association of Realtors (C.A.R.) press release from the research team helmed by Chief Economist Jordan Levin stated: “California home sales remain muted in October as elevated interest rates keep homebuyers and sellers on the sideline, C.A.R. reports.”
“At least half of the homes sold above their asking price in five California counties. Four of those five counties were in the Bay Area region. Alameda (72 percent) recorded the biggest share in the entire state, followed by San Francisco (67 percent), Santa Clara (65 percent) and San Mateo (58 percent). Glenn County (50 percent) in the Central Valley region was the remaining county with half of its homes selling above the asking price.”
Michael Simonsen, CEO and founder of Altos Research, is all over the internet with a theory that might interest you:
“Higher rates lead to greater inventory, and lower rates lead to less inventory. And that’s counterintuitive from what many people expect.”
He adds, “So yes, more houses will come on the market. They’ll just get snatched up faster. And so, then the net-net is you have fewer houses.”
Uncles like me and Simonsen sit at holiday dinner tables. We follow the data. Bay Area home prices remain high. That, we know. An apparent reality: We agree that overbidding will not end with lower interest rates. The housing shortage will continue. Bay Area home prices will not fall with interest rates.
Conversely, your uncles seated at your holiday dinner suggest waiting for better interest rates when prices are higher. Ignore that guidance. That is an acre-foot of free advice that will not bear fruit. Be polite. Listen to the suggestions. Then, ask them to pass the pumpkin pie. That way, they become helpful.
Questions? Or are you or someone you know navigating life’s transitions? Let lauded negotiator Pat Kapowich make your next move easy. Visit Kapowich’s website for free area housing data, insights and trends. Or put his artful blend of specialized credentials, decades of experience and endorsed skill set to work for you. Kapowich instills confidence when buying, selling, relocating or resizing homes. Do not just make a move — make the best move. Contact him today, Realtor Pat Kapowich, a career-long consumer-protection advocate.
Office: 408-245-7700; SiliconValleyBroker.com
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