The Fall market is in full swing, kids are back at school in one form or another, and although it’s happening a little slower than normal, the market is continuing to cool down as we move into October. Supply and demand have both decreased over the last month, but the numbers are so small that you likely won’t even notice a difference. Supply is still extremely low, and demand is still extremely high, multiple offers are still commonplace on properly priced properties, interest rates are still hovering at all-time lows, and the housing fundamentals still remain strong.
Let me paint a picture for you, you’re in high school, you’ve been looking forward to getting into a relationship your whole life and one day you pass a girl in the hall that stands out over everyone else. You see that a lot of other boys are also interested so you decide to ask her out before anyone else can. To your surprise she says yes!
You go on your first date, have a great time, she asks to see your financial statements, which you think is kind of weird, but besides that, you think you had a successful first date, are you falling in love? You get home after the date and you go to bed dreaming of a getting married, having kids, and growing old together. You wake up in the morning pick your phone up, open Facebook, and see that your crush just changed their status on Facebook to “in a relationship”
…with someone else. You’re heart broken and now are questioning if you should ever date again.
Unfortunately, this is similar to the emotional roller coaster that many buyers are going on time and time again right now. After years of waiting and thinking about it, they decided to start looking for a home, they tour it, fall in love, picture how their furniture and family will look in the new home, place a good offer, and send all of the financial documents that show they are willing and able to purchase the home at asking price.
Then, a few days later, their agent contacts them letting them know that even though they had a good offer, the seller selected someone else. This can be devastating, especially for first time buyers.
Now, I’m not saying, you won’t get your offer accepted on the first house you find, I am working with buyers now that have had their first one accepted, but because of the competition for homes, statically, there is a good chance it will take a few offers before you get one accepted. So how do you avoid as much of this heart break as possible?
- Make sure you are working with an agent that is explaining in detail the actual reality of the market right now. If you know what to expect when you go into the process, it will make the emotional blow of not getting your first offer accepted easier to manage
- You and your agent need to go through the contract and find ways to make sure you are writing a more competitive offer the first time, so you know nothing is being left on the table. There is nothing worse than a case of the what ifs when your offer doesn’t get accepted. “What if I went up $5,000 more?” “What if I was more aggressive with contingency removals?” etc. In this market, because there are so many good offers coming into sellers, I am seeing more and more sellers not even send out a counteroffer and just accepting the best offer they get. You don’t want to live with the nagging regret of not giving it your best shot the first time around.
- Know that whether you get your first offer accepted, or it takes 10, you will eventually get into a home and you will have secured a loan with the lowest interest rates ever seen for a mortgage loan, saving you thousands of dollars in the long run and putting yourself in a much better financial position while enabling you to buy a home, that even at the beginning of this year, you might not have been able to even afford.
We have a little less than two months before the market traditionally slows down for the holiday season, which is usually around the 2nd or 3rd week of November. This is when you will start seeing everything drop and continue to drop until mid-January. However, we will most likely be in a seller’s market for the next 6-12 months so you will still have an advantage over the buyers.
However with daylight savings time coming up in a month, it will start getting dark before many people get off work and there are many buyers that don’t want to go out looking for homes when they can’t get a good idea of the condition, especially of the outside, because of the lack of light. The end of Fall and beginning of Winter will bring less showings and will most likely decrease the % of homes that get multiple offers, which means it’s even more important than ever to make sure you are properly pricing your home based on the latest comparable sales so your house doesn’t sit on the market too long.
Because of the hot market you can still price your home slightly above the last comparable sale, but just make sure you are not just throwing out a number and hope buyers will be climbing over each other to buy your overpriced home. Many buyers have been in the market for a home longer than usual due to their offers not getting accepted, so they have a much better idea of what fair market value is after looking at homes for months now.
How does the Election Impact the Housing Market?
Based on the national tracking of home sales during presidential vs nonpresidential years, we know that home sales decrease by a little more than 5% more than usual between the month of October and November due to people being uncertain about the future.
However, researcher also found that the decline wasn’t so much of a slowdown as it was deferred sales, because typically the year following an election is the best year of the four-year cycle for housing. They also found that the actual election has far less of an impact on the housing market than consumer confidence and market fundamentals (supply, demand, interest rates). We know the market fundamentals are good but what about consumer confidence?
Recent surveys show consumer confidence among Republicans has been higher than Democrats ever since 2016. If Trump stays in office it’s likely to look similar to what it is now, however if Biden wins, you will most likely see these numbers flip. This could indicate that places that lean more democratic could see an uptick in sales while republican counties could see a slight decrease.
However, for Orange County specifically, registered Democrats and Republicans are close to equal in their numbers, and even though over the last few years there have been slightly more registered democrats in OC than republicans, because the numbers are close, I don’t expect that the election will have a major impact on OC sales based on consumer confidence shifts.
Also, going into this year’s election, the market fundamentals are much stronger than usual and consumer confidence is still decently high and stable in OC so I can’t see the election, no matter which way it goes, having a significant impact on the market other a slightly larger dip in transaction in November than during a non-election year. We are going into the election in a seller’s market and we will be coming out of the election in a seller’s market.