The one question I always get when talking to anybody these days is “When will this crazy market end?”
Well, I just received some insight, courtesy of local real estate economist, Steven Thomas, whom I have quoted in the past.
First, some detail. The current market is being fueled by the perfect storm of incredibly low interest rates and very low inventory. It will only change if either one or both of these situations change dramatically. The question is, “when!”
Well, it turns out there is some precedent for what is happening now (although not as dramatically as we are currently experiencing). In 2013, Orange County real estate inventory reached its lowest level since tracking began in 2004. At the beginning of 2013, inventory was at 3,161, and pretty much held to that level through April. By contrast, our 2021 inventory started the year at 2,633 and has DROPPED 15% through June. Interest rates were at 3.34% in January 2013, and went to 3.63% in March, and by July reached 4.37%. By that time, inventory had also risen to 5,522 homes in August, and by October reached 6,350 homes. Marketing time during that period went from 47 days to 80 days. Although marketing certainly changed, homes tended to hold their value during that period.
So, back to 2021. We will see increased interest rates and are already seeing some minor increase in inventory. Our market may change, but if recent history is any indicator, home prices are not expected to decrease.
So, bottom line, as I have been saying for months, this is a great time to be a seller, but also a very good time to be a buyer!