There are a sufficient number of billionaires that say to be bullish when everyone is being bearish that they can't all be wrong.
For most of California (I simply can't comment either way on the rest of the country, so I'm limiting my commentary to what I know), it's a buyer's market now. But everyone is scared to buy. Meanwhile, for sellers, the party has ended, and they're frustrated, making 'wasted' mortgage payments as it sits on the market for longer. The top appraisal blogger in the nation happens to be in Sacramento, in California, here's how he puts it in part:
"In a short period of time, we went from having three weeks of supply in the Sacramento region to ten weeks. What is causing this change? It’s easy to pin this on sellers rushing to list, but that’s NOT the case. This is actually about fewer buyers getting into contract. We’ve seen close to two thousand fewer sales since May, which means listings that normally would’ve sold are still on the market. In other words, the spike in supply came from weakening demand rather than more listings hitting the market."
10 weeks is 2.5 months. "They" say that 6 months is a balanced market. But we used to be at 0.5 months. So the situation feels a lot worse than it actually is. According to that metric, it's still a seller's market. But everyone's psychology, and the way they are behaving, says it's a buyer's market. It's a mighty elephant that's scared of a teeny tiny harmless mouse. Good time to be a mouse.
Random quotes:
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” - lots of pessimists out there right now trying to sell. If you read the /r/realestate subreddit, sellers are LOSING THEIR MINDS because it's been on the market for 3 days and they don't have 20 offers in-hand yet.
“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” - OK Warren Buffett, you got it.
“You make most of your money in a bear market, you just don’t realize it at the time.” - Real estate obviously isn't going to jump 20%/yr again this year, maybe that's ok, I think this is a form of the long-forgotten saying that people used to repeat all the time right here on biggerpockets, but that's fallen into disuse over the last couple years: "you make your money when you buy."
On the buy-side, everyone still thinks it's an epic 9 month journey with 15 rejected offers, bidding wars all over the place, bla bla bla, to buy a house. It's not. Right now it's more like 1) get preapproved, 2) look at 5 houses, 3) pick one, 4) buy it, and 5) keep an eye on inflation, because rates will follow inflation down like they followed it up, and you will want to refi at that point. That's it. The most drama free market (at least if you're a buyer, the story we just told includes 4 sellers frustrated with their listing agent -- but as a buyer, that's not my/your problem) I've seen in California in my limited time on this planet.
I certainly am not selling squat right now.
No crystal balls, but this is how it may pan out for those sitting on the sidelines because rates are scary:
- wait for rates to drop
- rates drop
- everything is a multiple offer situation again
- whoops
