If you'd rather watch the video....
Otherwise, happy reading!
If you’re thinking of buying or selling anytime in the next 3
months, you want to read this blog because we are going to break down what’s
happening at this very moment with homes that have JUST closed this past week
in Solano County. So whether you’re a first time home buyer or trying to sell
your home, you’ll know exactly what to expect, have a strategy moving forward
and know if now is the right time for you!
Let’s get right into it, now this year started off promising as
buyers rushed back into the market as interest rates declined to their lowest
level in months, hovering around low to mid 5%, with the news that inflation
was easing. This surge in buyer demand, combined with low inventory saw the
return of multiple offers and homes flying off the market much quicker they had
at the end of 2022. We experienced this
in Solano County as well- we had 2 listings in January and BOTH went within 3
days, at or OVER list price, and without any concessions. But, when the consumer
price index was released in mid-February and showed a higher-than-expected
increase in inflation, interest rates once again went back UP and we saw buyer
demand shrink. Current rates are sitting at low to mid 6%.
Now, expert advisors agree that despite this current spike in rates, we will
see a decrease throughout 2023, specifically the second half, with rates
projected to end up in the low 5s, possible high 4s. Now this is all predicated
on inflation continuing the soften, which is the overwhelming expectation for
the year, which is GOOD news for you buyers and sellers!
If we look at the Solano County market right now, we only have about 2 months’
worth of inventory, and while that’s more than what we saw during the pandemic,
it’s still far below pre-pandemic levels and continues to be a challenge for
buyers. To give you some context, only 85 homes closed in solano county in the
past week, compared to 111 this same week in 2022.
However, Spring is RIGHT around the corner and we plan to see more
inventory come to the market and sales increase, as it does this time in Solano
County every year. So what can you expect if you’re planning to buy or sell
your home in Solano county in the next few months?
FIRST TIME HOME BUYERS
Well let’s start with the buyers, specifically the first-time home buyer. If
you’re a buyer, prepare for tight inventory, interest rate fluctuations and be
sure you have a strategy to make sure you put your best foot forward. If you’re
a first-time home buyer and you want a more turnkey home, be ready to move
quickly and be competitive with your offer.
The good news is that there is still opportunity for you to get some seller
concessions on these homes to help with closing costs credit or buying down
your rate but know that you’ll most likely have to put in an offer over list
price.
There was a 3 bed, 2 bath 1488 Sq. Ft. home in Suisun for example,
that closed in just 14 days and the seller gave the buyer $13,000 in closing
cost, but it sold for $50,000 over asking! But don’t worry, you don’t have to bid
$20,000-$50,000 over list price to get seller concessions- this house was a bit
of an exception because it was priced so competitively below market value.
But there was a 3 bed, 3 bath 1868 sq ft Fairfield home that more
closely resembled what we’ve been seeing as a “winning offer” in this market.
The home closed in just 9 days and the sellers gave the buyer $10,000 in
concessions, but the home sold for $10,000 over list price at $620,000!
So know that if you’re looking for those homes under 650K, the
market will be competitive all year, but you’ll see fiercer competition anytime
the interest rates lower, so be prepared to offer more favorable terms to the
seller, especially if you need any kind of concession. Everything is going to be trade off and it’s
going to come down to what works best for your situation.
2nd or 3rd TIME HOME BUYERS
Now if you’re a 2nd or 3rd time home buyer looking to
sell your home and move up, you’re going to want to make sure you have an
experienced realtor who knows the market in your corner because inventory and
rates will make the process of selling your home and buying a new one a little
more challenging than it has been in the past.
In Solano County, we aren’t seeing a ton of inventory in that $650K-$850K
price point, especially with resale homes. Again, when we look at homes that
have sold in solano county in the past week, only 19, or 22% of them were between $650K-$850K, compared to 30%
the same week in 2022. Now, a large
reason for this is because more than 85% of homeowners nationally have a mortgage are 'locked in' at sub-5% rates
and since we haven’t seen home prices sustainably lower here in Solano County,
there is not enough motivation for people to put their home on the market and
buy a slightly larger home for a much higher payment.
So we are seeing homes in this price range sit on the market a little bit
longer, simply because the buyer demand is lower than say, the first time home
buyer. There was a 4 bedroom, 3 bath 2000 sq. ft. Dixon home was on the market
for 72 days. As you can see, it’s a beautiful house but ended up selling for $11,000
under its list price for $638,500.
The good news if you’re looking to move up into that 2nd or 3rd
home, contingent offers are now very much on the table and returning to the
norm, however, because inventory and demand is lower in this price bracket,
there is not as much concern that you WON’T get the house that you want because
you are contingent upon selling your home.
BUY AND SELL
However, if you want sell your current home first, let’s say you
get an offer that’s too good to pass up, and then go buy another home, you will
want to make sure your agent has negotiated a rent back for you, meaning that
even after you close on your home, you can still live there for 1-2 months. But
in general, if you’re looking to buy and sell this Spring, you can expect it to
be easier to sell your home, than find and buy a new one. Having an experienced
agent who can walk you through your unique situation is going to be key right
now.
Now if you’re looking to sell your home this Spring in Solano
County, you’ll want to make sure you pay close attention to interest rates as this
will dictate buyer demand and what kind of offers you can expect on your home.
Our last listing in Vacaville was sold when rates were at one of the lowest
times of the year, and we had multiple offers and sold the home within 2 days
over asking price. So just be aware you’ll need to negotiate and compromise a
little more if you’re selling your home when rates are higher, be prepared for
it to sit on the market until rates come back down. However, you’ll want to
careful about how many days you let pass before compromising because you could
end up with even less money than you hoped if your home sits on the market more
than 2-3 months.
Take this Vacaville house that sold last week for example. It was on the market
for 213 days and is a beautiful house
with a stunning pool but it looks like the seller remained firm on their price
but in the end, they closed the house for $169,000 under the original
asking price at $680,00, AND gave the buyer $5,000 in concessions. So, you’re
going to want to rely on your agent when coming up with a competitive price for
your home who has a pulse on the current, local market and can talk you through
your options. Good news, Spring is still one of the best times to put your home
on the market and that’s what we saw last year in 2022.
If you are selling this Spring, you also want to make sure that
your marketing is professional and strategic. Investing in not just
professional photos, but videos and a marketing strategy that appeals to your
buyer pool is critical right now. A survey by Statista found that 95% of all
buyers use the internet for home searching, meaning the first impression a
buyer will have of your property, will be of the photos and videos online. And
that number shoots up to 99% when you look at buyers aged 23 to 56!
This is why preparing your home, decluttering it and working with
your agent to get it market ready to so critical right now. Even if you’re home
is empty, we encourage virtual staging just so buyers can visualize themselves
in the space. We made the investment in our Dixon. Listing, and it sold within
3 days and again, really helps to sell the space. So to sum up, if you’re going
to sell this year, know that pricing, marketing and mortgage rates will all
play a big factor in the success of your hoe selling for top dollar and you’re
going to need an experienced and knowledgeable realtor to help you navigate all
three.