How Inventory Levels Affect the Sale of Your Home

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One of the first things I discuss with prospective sellers is the idea that there is a certain absorption rate that must be considered when looking at a market in which to list a home. In essence, absorption rate is a tool used to evaluate the supply and demand of the currently available homes on the market. The reason this has an impact of your home’s selling success is clearly because it will show a correlation as to how much in demand your home may be in that neighborhood and how quickly other similar homes are selling.

To understand this further, I have broken down our areas of coverage (Rancho Mirage, Palm Desert, Indian Wells and La Quinta) into price points and explained each as follows:

Median Price Point of Up To $500,000

At just 4.2 months of inventory on hand, up from a very low supply of 2.9 months in May of this year – we are seeing homes in this price range selling very fast particularly when they are priced right or even priced slightly above recently sold values. Depending on your motivation level to sell your home, it could take that much time (4.2 months) to sell but it is critical to price your home appropriately.

$500,000-$1,000,000 Price Range

There is a significant difference in inventory levels with this mid-level price point and it shows in the 11.9 months of supply currently on hand. This number is down from just a year ago when the number of available homes in this range on the market was 14.9 months worth. In other words, if no new homes were to come on the market in that time frame it would take 14.9 months for all those homes to sell assuming market conditions remained the same. In this case, pricing below the market may be needed to get your home sold quickly but for the most part it is important to remain patient with the market.

$1,000,000- $1.5M

This price bracket of homes presents a greater challenge since there are currently over a year and a half worth of homes on the market, up barely from a year prior. Since homes in this market are moving at a snail’s pace it is important to identify your motivation level and if the need to sell quickly is there then you may need to price very aggressively and be willing to adapt to the market. Lowering your expectations is key to selling success for homes in this price range today.

$1.5M and Up

The luxury home market traditionally has a very slow absorption rate and this year is no exception. With a five-year supply last year and a 20% improvement to just 4 years worth of available homes this year, things are selling in this market but very slowly. The hit and miss results can be very discouraging but it is important to keep in mind that once again aggressive pricing strategies and the willingness to be open-minded when it comes to adapting to the market will make a difference. Typically, the higher the inventory of homes in any price bracket the lower the prices seem to be driven – therefore we strongly suggest selling now rather than rely on an uncertain market in the future.

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If you would like to explore the options for your home, regardless of price point, contact us today for a customized consultation on how we can help you achieve your real estate goals. We look forward to serving you! Call 760.774.0105 today!

Interest Rates and Available Loans Make It the BEST Time to Buy

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Anyone that is watching the real estate market knows that interest rates have never been as low as they are today. In fact, this is a historical occurrence that keeps on repeating itself month after month after month. There is no telling how long the Fed will keep our base rate down but for now, we’re in great shape. Today, we meet with Ed Lotstein from the Franklin Loan Center to talk about some of the trends we are seeing in today’s marketplace with respect to mortgage rates and loans.

Record Setting Historic Lows Present A Phenomenal Opportunity for Buyers

On 30-year fixed rates loans for conforming loans – we are seeing a typical rate of about 3.125% with a point on loans up to $417,000. Loans with zero points are coming in at an interest rate of 3.375%. Government-backed loans such as FHA or VA loans have mortgage rates in the low 3s – once again an unprecedented historic low. Jumbo loans in the amount of $700,000 to $800,000 are reported at below 4% at the present time.

All these rates are lower than any of us have ever seen in our entire lifetimes let alone careers.

The take away message is that now is a great time to buy. If you have been on the fence about whether or not to buy, the low cost of borrowing offers plenty of motivation. When you combine the relatively low housing values with low interest rates, it is a great time to get a good deal. In fact, I strongly suggest meeting with your loan officer to work out the numbers; you will be surprised at how much the savings add up once you pull an amortization schedule. When buyers lock in the phenomenal rates available today for 30 years, or even 15 year terms, the savings compound into thousands of dollars.

Refinances Are Allowing Existing Homeowners to Save Hundreds

In addition to new purchases, the low interest rates are also benefitting millions of homeowners with some equity in their properties. If your mortgage is currently at anywhere above 4%, we strongly suggest meeting with a loan officer to assess your financial situation and discuss refinancing.

Financing Available for Canadian Citizens in the United States

While on the topic of mortgage financing and phenomenally low rates, one thing that many people do not realize is that financing is available for citizens of Canada that choose to purchase properties in the US. In fact, there are hardly any countries that allow foreign nationals to obtain such financing. There are a few requirements that are different than the standard finance process for American citizens. Canadians would require a 30% down payment on the property and the process would entail a full documentation loan where detailed documentation of financials and tax returns would be required among other things.

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Regardless of what your real estate needs are these days, one thing is certain – the market today is ideal for buyers and investors. We invite you to contact us today for more information about how we can help you achieve your real estate goals.

Dave Kibbey 760.340.9253 or dave@teamkibbey.com

Ed Lotstein 760.413.8866 elotstein@franklinlc.com