May 2021
What to know if you are planning on listing in 2021
About 1 in 6 homeowners plan on selling their home in the next 18 months, according to a NerdWallet survey of 2,127 homeowners. Those listings will be a welcome sight to buyers currently competing for a limited number of homes commanding top dollar.
Nearly half (45 percent) of those planning to sell in the next 18 months say recent changes to the housing market, including higher asking prices and lower inventory, have spurred them to sell earlier than initially planned. If you're among the homeowners preparing to be on the favored side of this strong seller's market, here's what you need to know.
You may be able to skip presale home improvements (but personally I wouldn't recommend it). Unless the house has a major problem like a leaky roof, you could be better off selling as-is. Make it a priority to declutter and depersonalize the home so it's easy for buyers to imagine themselves living there. If you list your home in this market, there's little question of the outcome. Barring any significant defaults or dramatic overpricing, you'll sell your home. It will happen quickly, and you could receive multiple offers over the listing price. Of course, there are no guarantees yet at the end of the first quarter the list to sale price ratio in Santa Cruz County was 106.7%.
Here is the drawback, as the very thing that makes it a good time to sell make it a tough time to buy a house. Just 10% of those planning to sell in the next 18 months say one of their primary motivations for selling is that they no longer want to be a homeowner, according to the survey. For the rest of these sellers, entering the crowded pool of home buyers will present challenges.
Whether it's the location - such as moving closer to family, outside of the city or for a new job - or the home features, every item on your list of must-haves will make finding your next home a greater challenge. The trickiest part of navigating today's market is finding a home to replace the one you're selling.
COVID-19 Market Update from C.A.R.
After I responded to the monthly survey from the California Association of Realtors, here are some results from agents across the state.
The aggregate statistics point to an overall market that continues to do well. Based upon daily transaction volume recorded on the MLS's last week, home sales in California accelerated from their 2020 pace with a 67.6% increase over cumulative sales to the same point in May 2020. Sales increased in every region of the state last week with the exception of the Central Coast, which saw a modest decline from the week before. Overall, home sales are only slightly below their levels in late 2020, when statewide totals were near 15-year highs.
REALTOR optimism remains high with roughly half of all agents still expecting more sales and listings in the coming week and nearly 70% of respondents betting on higher prices. However, drilling down into the individual experience of these same respondents shows that far fewer are enjoying the gains-less than one-third of agents surveyed listed a property, entered escrow, or closed a transaction last week. In other words, REALTORS® remain optimistic about the broader market conditions, even if that hasn't led to a corresponding boost to their own business.
Although last week was the 50th consecutive increase in new mortgage applications for home purchases on a year-to-year basis (+24%), the pace of growth dipped for the second week in a row. On a weekly basis, the purchase index has been down in 5 out of the past 6 weeks and is now roughly on par with where it was during the same period in 2019.
Technically a decline, the typical rate for a 30-year fixed-rate mortgage was essentially flat at 2.96%-a modest change from 2.98% the previous week. Fortunately, 10-year Treasury rates held steady at 1.61% last week, but we should still expect mortgage rates to rise in coming weeks due to both normalizing inflation and mortgage rate spreads that are compressed relative to historical norms.
Lastly, the percentage of consumers who said it was a good time to buy was flat in April at just 25%. Meanwhile, the percentage of Californians who said it was a good time to sell rose to 66%-an all-time high since survey began in 2018. In addition, the gap between buyer and sellers was also at an all-time high of 41% last month. This tracks with recently released data from Fannie Mae's Home Purchase Sentiment Index, which showed a similar national downtrend in purchase sentiment.
Judge vacates CDC's eviction ban, but
A U.S. District Court judge for the District of Columbia ruled on May 7th that the Centers for Disease Control and Prevention's nationwide eviction moratorium is unlawful, striking down the ban and delivering relief to housing providers who haven't been able to collect rent from struggling tenants for more than a year.
But the struggle for housing providers isn't over. The U.S. Department of Justice immediately filed an appeal, and on Wednesday night, the D.C. District Court issued a temporary stay, meaning the CDC eviction moratorium remains in place across the country pending another hearing. The court will have a hearing in the next two weeks on the DOJ's motion, and the temporary stay will remain in effect at least until that decision is issued.
Buying sight unseen is not new.
Buying a home "sight unseen" was not a phenomenon invented during the COVID-19 pandemic. It's long been common for investors and military buyers who are relocating, among others, who sometimes must make purchases without visiting a property. With the shift to virtual tours and showings in the past year, more buyers are making offers without setting foot inside a home. It's important for buyers to know the risks in "sight unseen" sales that can lead to problems and any good agent should take steps to mitigate those risks.
When buyers purchase a property relying only on photos and online tours, problems can arise if the home doesn't meet their expectations in real life. Disappointed purchasers may bring claims against the seller or brokers when they discover a previously unidentified defect or other undesirable feature. Such claims typically involve a failure to disclose a material fact or a misrepresentation of the property's condition or characteristics. This is the number one complaint currently registered with the Department of Real Estate.
Here are some ways to avoid problems with "sight unseen" offers. Make sure the seller disclosures are accurate and fully completed and provided as required by state law. Your agent should follow up with the listing broker for any missing responses and ask what additional information is needed related to any disclosed defect. For example, if a seller discloses prior water damage, the buyers may want to ask for proof of remediation and request additional inspections.
Question any misrepresentation or exaggeration in listing photos and virtual tours. REALTORS® should present a true picture to the public. Watch out for red flags. REALTORS® have a duty under the Code of Ethics to avoid exaggeration, misrepresentation, or concealment of pertinent facts, but do not have a duty to discover hidden defects. Carefully view the property during a virtual showing to identify any observable defects.
If possible, write down any issues you may be concerned about (such as noises, smells, or proximity to neighbors). Observe and report objectively, but don't make the decisions or assume something "isn't a big deal."
Quarterly comparisons for Santa Cruz, Monterey & the Bay Area
Comments: A gradual increase of 9.5% in the number of new listings as spring expands and not surprising, a significant uptick of 30% in number of sales in all three counties. Median price was up again over 4% in Santa Cruz and Santa Clara counties with Monterey County up 7%. Days on the market dropped 60% to 14 days from March and is down over 25% in Monterey and Santa Clara counties. I keep being amazed at the continual increase across the board. When will it slow down or end? Display of MLS data is deemed reliable but is not guaranteed accurate by the MLS.
