Real Estate Round-Up: Sellers can succeed in a buyers' market

California has 12 percent of the nation’s population and 10 percent of the nation’s housing stock. Historically, California has led the nation in the cycles of real estate, both up and down, and California’s statewide trends are generally a harbinger of what can be expected nationwide. In 2005, it was the first to show signs of fissures in the housing market. In 2008, it was the first to take off with investor all-cash sales. It was also the first to experience the chronic lack of inventory that is now an impediment to sales throughout the country.

A tight supply issue has been lingering for years and has finally turned into a demand issue. With a strong economy and new households continuing to form in California, home sales were expected to increase from 2017, despite an anticipated interest rate hike. Up until April 2018, the market performed in line with these expectations. California appeared to be on track to have another year of gain in both sales and price.

Then something happened in May. Buyers became more cautious. Prices had risen enough that buyers did not want to repeat the mistakes that were made in 2005 and 2006. They did not want to purchase an overvalued property. Interest rates were creeping up, so some buyers were no longer able to purchase. Sales dropped on a year over year basis at a pace that caused concern.

In Fallbrook, from May through December, unit sales for detached homes has dropped from 491 units in 2017 to 354 units in 2018. That’s a 27 percent decline in units. The average sales price has dropped 7 percent, from $671,617 to $623,912. The median sales price has dropped even more dramatically from $640,000 to $542,000, which represents a 15 percent decrease. These are big numbers. So, what’s a seller to do?

Price their home appropriately. Buyers are still buying. They are buying the best valued home they can find. They won’t pay more just because you “need” to get more. They won’t pay more just because you “paid” more or because you did improvements to your home. They are doing what you or I would do, and that is making the wisest purchase they can make based on what is available.

I was thinking back to a vintage Mercedes 280SL I had years ago. During the time that I owned it, I had to drop a new engine into it. When I sold it, the buyer didn’t care that I had invested those additional funds into the automobile, because that investment was necessary to maintain its value. It’s the same with a home. Putting in a new kitchen, new windows or improved landscaping, doesn’t add to the value of a home in the current market. The buyers expect these amenities to be present in this competitive market.

The other aspect to consider in this transitioning market, is the fact that it’s the same scenario across the state and the nation. If homeowners sell their home for less than what they originally hoped for, they will also be able to purchase for less than what they originally anticipated.

The current trend the state is experiencing is not the jubilant sellers’ market it enjoyed the first half of 2018; however, if sellers work with their real estate agent and are strategic about pricing their home, they will be successful. A wise pricing decision will help them sell their home in this buyers’ market and move onto the next chapter of their life.

Kim Murphy can be reached at [email protected] or (760) 415-9292 or at 130 N. Main Ave., in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.