As the Market Turns – Shifting into Neutral

neutral gear 1

Up until July we had a massive shortage of inventory in Orange County Real Estate leading to a frenzy of multiple offers from buyers coming in as soon as the for sale sign went up.  That type of market can’t last, and now most signs and statistics point to it being over, at least for now, as we look to be entering a neutral market. Sellers can no longer expect to be flooded with high quality offers within hours of putting their home on the market and buyers should find a lot more options without having to trip over each other to get their next home.


So how did we arrive at this neutral market?  There are a few reasons, first is interest rates have been steadily climbing over the past few months. When the interest rates rise it reduces the purchasing power of potential buyers.  We had a day where the rates jumped up dramatically causing many buyers to pull out of their home search since they no longer qualified because the rise in rates created a higher loan payment. Another reason for the change is that sellers were getting a bit ahead of the market.  In the earlier months of this latest seller’s market price appreciation was building slowly on the prior sales as appraisers were cautious and making the market prove its increase in value.  So if your neighbor sold his home for 750,000 a month ago you could go up say to 755,000 and be okay. However as each sale was starting to build on the prior it started to snowball and a reasonable 5k increase became a questionable 10K or more increase.  Now that type of rapid appreciation works okay when inventory is extremely low in comparison to demand but that more homeowners have equity and decide to sell their homes the inventory is rising which has stopped the steep price increases. Lastly the fall is historically a slower housing market as families are busy getting in that last vacation of the summer in late August and dealing with back to school matters in September so the last thing on their mind is moving.

So how can you benefit from a neutral market in South Orange County Real Estate? For sellers the keys are be patient if you can and wait for the right buyer and price, be flexible on terms and price (prepare yourself mentally to give and take to create a win-win), properly prepare your home for sale (the best homes priced correctly sell in almost any market) and make sure your property is properly marketed to maximize exposure and show its best features to potential buyers. For buyers you will have a lot of options and should have more negotiating power than you did during the last seller’s market but don’t delay to much since rates are expected to keep moving upwards and a half point rise in rates is about and extra $150 every month on your mortgage payment and with the tighter debt ratios being used you may see the amount of home you qualify for drop significantly as rates head upwards.

So for the seller’s be patient and price your home correctly.  Make sure when talking to your Realtor that you fully understand the real value of your home and price it according to your needs (do you need to sell fast, can you wait out the market a bit, etc.). For the buyers out there take heart in that there is a lot more inventory and that means you can shop around for the right home and the right seller to get the home of your dreams and the price that you can afford but don’t waste to much time shopping because as rates rise your monthly payment goes up and your buyer power goes down.

Whether you are a seller or a buyer contact me directly  to help you navigate this changing real estate market.

Sherry Swift

949 599 6860

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Article Name
Orange County Real Estate Shifting Into Neutral
The Orange County Real Estate Market is shifting from a seller's market to a neutral market, see what you need to do as the market makes this shift.
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