If you hang around anyone who is planning on buying or selling their home, or anyone who works in real estate, you will hear them reference, "the market." It is almost as if everyone has the same knowledge and understanding of what the market is and what it means!
Well, I am here to tell you that you are not the only one confused about the market and also, that IT IS OKAY if you aren't well versed on all of the lingo in real estate-I can help. I can also give you a small explanation on this seemingly mysterious concept giving you the tools you need to understand a little better what we are dealing with now in "the market."
When someone references "the market" they are talking about the properties available for sale, usually in regards to how competitive it is at that time. The real estate market is driven by one simple concept. Here it is, folks. The great secret. The one thing you need to know about the market to understand how it works issssss.....supply and demand.
Let me explain.
You will typically hear two different labels in regards to the market. Buyer's market and Sellers market.
Buyer's Market:
When there are a lot of homes for sale but not a lot of people looking to buy homes.
The buyer has more leverage because the seller doesn't have a lot of options for buyers.
The seller usually gets a lower price and sometimes will pay for some of the buyer's closing costs or inspection reports.
Seller's Market:
When there are fewer homes for sale than there are buyers looking to purchase.
The seller has more leverage because they will have more selection of offers and buyers are more motivated to sweeten the deal for the seller so their offer will be chosen.
In a sellers market, the seller will get a better price for their home because there are more people willing to pay for it. Also, the seller will usually not be asked to pay for any of the buyers costs.
How does this effect prices? Here's how.
When there is a lot of demand for a home but not a lot of supply of homes for sale (sellers market), prices increase. People are willing to pay more to beat out the competition causing home prices to go up.
When there are plenty of homes for sale but not many people looking, (buyer's market), typically prices will decrease because there just isn't enough demand. There are pros and cons of each side of the market.
The real estate market is ever fluctuating. There is really no way to know for sure what will happen with the market in future months or years, but there are a few ways to look at existing data and anticipate what will happen.
Why does the market change? For lots of reasons!
A current example is the Coronavirus pandemic. When the pandemic hit, most people were staying home a lot more. This leads to home owner's needs to change. For example, now they are working from home which leads to needing more space, perhaps needing an office, maybe a different floor plan or additional rooms. Now, kids are learning remotely, that means more space for the kiddos too. Now, families are home all day, everyday. Homeowners see their spouse and kids all day, everyday. Maybe this causes people to become stir crazy. More space can't hurt.
OR, maybe the homeowner lived in a high cost of living area like San Francisco or Los Angeles. But, now that they work remotely, they can move to a lower cost of living area like the valley and still keep their high paying job. Needs change and that effects the market.
Another factor that effects the market is interest rates. When interest rates are low, buyers are more motivated to purchase to save in the long run on interest. But, when interest rates are high, buyers only buy if they have to or if they don't mind paying extra in interest. They also have options to refinance later.
What does the current market look like? (April 2021)
Right now, the real estate market in the Fresno Area is a sellers market-meaning inventory of homes available is low and demand for those homes is high. Due to this, home prices are a little higher and the competition is a lot higher for buyers.
BUT, that does not mean that it is not a good time to buy. For now, the interest rates for home loans are very low making it so that it is still affordable to purchase. I personally know a lot real estate professionals who are still purchasing in this market. Shoot, even I upgraded my house in this market due to interest rates being so good.
With that being said, I highly recommend talking to the correct people who can help guide you through this process and help you decide if this is the right time for you to purchase.
For sellers, this is an excellent time to consider selling your home. I know that it can seem intimidating to sell because you will need to find a new home in this market. But, it is not impossible and with the correct representation, you will be able to secure a new home! I can help with both buying your new home and selling your current one.
How does this effect you?
Well, it is always smart to get as much information as you can about the current market. The more you know, the better your experience will be. But, you don't have to become a real estate agent to buy or sell a home. Find a realtor you trust to guide you through the process of making one of the biggest purchases you'll ever make. It is important.
The first step is to have a basic knowledge of what you are looking at: the "market." I hope this helps you feel more comfortable looking at your options for purchasing or selling. I know it is a big decision! You've got this!
If you have any questions about the market, buying, or selling a home, let me know! I can help.
559-978-2413
kelly@kellybrennanrealtor.com
DRE02106427
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