Fairfield Market Report for May 2019.
May is supposed to be the hottest selling month of the year. Just look at May of 2018. closed sales for Fairfield 137 homes. In May of 2019 we are down 24.1% in homes sold. May 2019 has turned out to be one of the slowest months in terms of homes sold in the last 2 years. Why is this?
I have written about this trend for the last six months. Back in July 2018 we all got scared as interest rates starting climbing towards 5%. Now I know 5% seems high but just ask your mom or dad what interest rate they paid on their first home. My first mortgage was 12.8%. Now that’s high. Historically 5% is crazy low. This however did not sit well with the home buying community as we started to see a significant slow down in homes selling and prices for the first time since about 2009 started to slip. Take a peek at home mortgage interest rates over the lat 12 months and then look at the 5 year chart. Does this surprise you?
Based on this information alone today might be the single best day to buy a home in at least the last three years. Today’s interest rate is 3.84%. So why do we continue to slow in the market with regard to the number of homes selling? Why is demand slowing down? (See my infographic on 4 Reasons To Sell This Summer Here)
To answer this we have to dig a little deeper into the numbers and perhaps other factors. Let’s look at our inventory levels. This tells us a lot about where the market has been going for some time. Over the last three years, our inventory level has nearly doubled to a current high of 2.1 months. This number tells us that all the current homes for sale should sell within the next 65 days. Yet home sellers continue to expect to get offers within the first couple of days if not by the first open house. This is simply not the case. Unless your home is absolutely top of the line amazing in every way and priced below everything else comparable. You most likely won’t get an offer in the first 30 days and maybe not until the 6th or even 8th week. An effective selling strategy starts with setting realistic expectations and delivering a marketing plan to back that strategy up.
So why is everyone trying to sell their home? Is this part of the mass exodus from California I keep reading about? Are you planning to sell in the next 12 months? If so, pay close attention to the next part of this article.
When did you purchase your current home? If you did so 8 years ago in 2011 then you are equity rich right now. Our median price in 2011 was just under $200k. Yes, you could buy a house for under $200k back in 2011. That same house today is worth more than double. Now that’s winning the lottery. Would you want to cash out if you just more than doubled your home wealth? (To get a complete detailed analysis of your homes wealth report go here: http://bit.ly/2HH2QsP) Our home values peaked between July 2018 and September 2018. Which corresponds to prices slowing, demand lessening and our inventory levels going up. Sellers are cashing out. Even if you purchased as late as November 2015 you have some really good equity. This also explains the big refinance boom that has recently hit the market.
Light in the tunnel for buyers…
It’s Buying Season
When sellers start cashing out, buyers start reaping the rewards. Prices have softened, our days on market (DOM) has increased 33.3% year over year and our list price to sold price is hovering around 98%. This all means it’s a good time to be a buyer. (Get a FREE copy of my Home Buying Guide for Summer 2019 here) Selection of homes for sale is plentiful and buyers can take advantage of the lower pricing, better terms, seller credits and basically participate in the negotiation more than ever. The last 8 years have been a strong seller’s market with sellers dictating all the terms and snubbing their nose at things like 3% sellers credit, paying for repairs, etc. Sellers need to be on their toes with a top-notch property if they plan to sell this Summer.
SELLER: get my FREE Sellers Guide “Things to consider when selling your house”
BUYER: Get my FREE buyer’s Guide “Things to consider when buying a house”
There are currently 236 homes for sale in Fairfield. 12 two bedroom homes with an average price of $372,579, 89 3 bedroom homes with an average price of $488,804, 88 four bedroom homes with an average price of $677,801 and 47 5 bedroom homes with an average price of $860,532. I am sure the perfect home is out there waiting for you, the new owner…