Anecdotal evidence suggests that we’re moving into a summer slowdown. It’s not unusual for the home-sale market to begin to slow during July and August, when many real estate agents and buyers are on vacation — those months, though, still tend to have higher sales than most other months. The market often picks up again after Labor Day, and October can be a good month for home sales.
A slower market shouldn’t deter you from beginning or continuing your home search, as long as you have realistic expectations. Some real estate agents advise their seller clients to hold off on marketing their homes in August. This means there might be a slowdown in new inventory coming on the market and fewer new listings for you to consider.
Patience is the name of the game in today’s real estate market. There are many uncertainties about where the market is heading. Many economists think we’ve hit bottom, price-wise. But we may not see a significant improvement in home sales for several years.
Buyers need to understand that they could see lower prices ahead, followed by improved market conditions. However, a sustainable recovery will depend on a strong local economy with sufficient job growth to fully stabilize the housing market in your area.
HOUSE HUNTING TIP: Try not to dwell on national headline news regarding the housing market. Real estate is all about location. It’s imperative that you research your local market to find out what conditions apply there. Home sales in your area could be better, worse, or similar to what’s going on nationally. Don’t make homebuying decisions based on national data.
In areas where there is plenty of inventory and homes are selling slowly, buyers have more opportunity to negotiate price or wait for a better deal if they run into a stubborn seller.
In the most desirable areas, like many communities around California’s Silicon Valley, you may find yourself in competition. Silicon Valley is currently one of the top places in the country for job creation. Besides local employees, overseas investors are finding Silicon Valley communities a favored place to invest. Multiple offers and higher prices are becoming common in these areas, as are all-cash buyers.
If your choice area is a hotspot in the market and you don’t have the stomach for bidding in competition, you may need to alter your search parameters. One option is to trade location and commute to a community that’s not quite as popular. You’ll travel further but pay less for a home.
Most buyers prefer to buy when the housing market is firmly on solid ground. However, prices tend to be higher. Would you rather have purchased in 2006, when buyers couldn’t buy fast enough? Many of those buyers lost their homes in foreclosure during the five years that followed, when home values dropped 25-50 percent, depending on the location.
It may take time to find the right home to buy, particularly if there is a lull in new inventory coming on the market. But it’s essential to wait until the "right" house comes along. You may not be able to sell it again soon for what you paid if you factor in the costs of sale.
That’s not to say that you should hold out for the perfect dream home. The perfect home doesn’t exist. Buying a home involves making trade-offs. Prioritize your wish list so that you’ll know how you’ll be willing to compromise when you find a home that comes close to perfect.
THE CLOSING: Some buyers are waiting to buy until housing has fully recovered. This could mean paying more for a home either in terms of price or a higher interest rate, or both.