How's the Market You Ask?

How’s the market you ask? The phrase “there is no inventory” was with us for many years, especially from 2020 – 2022. A plethora of buyers and relatively few houses to sell. The demand was greater than the supply. Economics 101 was in full force and we watched home prices climb resulting in appreciation rates of 10%, 18% and 11% during those years! Interest rates were extremely low, which created opportunity for buyers, but rising home prices and competition created a frustrating challenge.

Ah yes, but we humans adjust. We get used to things being the way they are. Even higher interest rates, which historically are not high at all. See table below. 

And life happens! People need to move because they have a child, or another child, or the children move out and a smaller home is in order. Or a job takes them away and they have to sell their home, or whatever! Change is inevitable and we adjust to that too.

The inventory of homes for sale has risen and is higher than it’s been in a long time, although historically, it is still low. It is not yet a “buyers’ market” per se, but it’s better now than it has been for buyers in that there are more choices, some prices have softened, and the market has normalized more than it has been in a while.

The fact of the matter is that prices in our area are not likely to go down much, barring any major economic downfall. There is still a shortage of homes for sale and there is a likelihood of it staying that way. During the building boom of the 1970’s, there were ~300k homes built per year with a population of 20Mil in California. Today the population is twice that, at about 40Mil, and Our Santa Cruz and Monterey area is particularly scarce on available land to build on. Which is why you are seeing many vertical housing developments being built to try to satisfy the demand. Not to mention the state mandated requirement that cities provide more housing, affordable and market rate.

Buying a home, or real estate in general, is for the long term. Holding on to real estate in California will likely build in wealth. There are occasional drops, but over the long term, the gain will offset any loss. The benefit is that you also get to live in your “investment”. Stocks and bonds can’t do that. Economic uncertainty is short term. Real estate has weathered wars, recessions, booms and busts - and it always evolves. Bottom line, buy now if you want or can. It’s not getting any cheaper.