What we refer to as “inflation” is generally measured by the Consumer Price Index, a measure of average prices for basic necessities like gas, food, and housing. The CPI jumped more than 9% from June 2021 to June 2022, hitting a new 40-year high in the process.
So how can you keep inflation from affecting your wallet? The Skimm has a few tips.
In a constantly evolving market, data is king (or queen). Regardless of where your home falls on the price spectrum, one key performance indicator for the housing market is luxury sales, which reached historic highs in the spring. But just a few months later, numbers are down year-over-year:
Recently, we had a conversation with friends about the commissions real estate agents receive on home transactions. They wanted to know if a 3% commission was a good rate. The truth is that a good real estate agent could mean the difference between getting what you want and settling for less. The real question is how much that’s worth to you.
Real estate agents are there from the very beginning of your buying or selling journey. We help prepare homes for sale with staging and marketing plans designed strategically to get you the maximum return on your investment. A good agent will also order a pre-inspection to make sure there are no surprises. Once you’re ready for market, an agent will make sure you don’t set a price so high that you scare buyers away, or so low so you leave money on the table. Agents understand buyer demographics and conduct a comprehensive marketing appeal to showcase the home. Bottom line: We are dedicated to acting in your best interest.
Many people think an agent’s work is done when the “SOLD” sign goes up. We continue to work with you all the way through to the closing and key transfer, dealing with the inevitable snafus — “Where did the washing machine go?” “I thought the property line was over here.” etc. The best real estate agents are masters of many trades, and extremely resourceful. We don’t just recommend contractors who do great work at reasonable rates; we coordinate projects to make sure they’re done on your schedule. There are so many moving parts in a big transaction. Our job is to minimize your stress and get you the best result possible.
Amidst news of rising interest rates and supply shortages, there are opportunities to find silver linings in the housing market. Let’s take a look at a few examples:
One piece of good news for potential buyers is that banks should get faster and more efficient at processing loan applications, especially with a sharp drop-off in re-financing due to rising federal interest rates.
Another positive is the job market. Prior to the pandemic, we were already experiencing high unemployment — and under-employment — and the COVID shutdown took it to record levels. Today, there are two jobs available for every unemployed American. That means more people with the potential to buy, especially first-time buyers.
And while supply chain breakdowns have left some store shelves empty, many retailers are overstocked in some goods, leading to sales and discounts for savvy buyers.
If the Fed's goal was to bring down prices, it’s working. Following spikes of 20% or more in the past 12 months, the volume of price adjustments off super-high prices is now up 69% compared to May 2021.
In a cooling market, buyers also have more choices and opportunities. Over the past year, we’ve seen as many as 10 bidders on a single property, making it hard to score the home you want. Now, inventory is up an average of 8% over last year in many parts of the country — including the Bay Area — which means prices could continue to drop.
And if you’d rather build your dream home — and who wouldn’t? — lumber prices have fallen roughly 56% off this year's highs, and copper is down 18.3%.
Don’t let fear get between you and your dream home! If you’re physically prepared and mentally ready, the right time to buy is whenever you’re determined to buy.
It’s totally understandable for anyone looking at the market right now to feel a little worried about taking the leap into home buying. After all, this is one of the biggest financial decisions you’re ever going to make. You want to get it right. That’s why we suggest taking a breath and focusing on what you can control: your goals.
If you know me, then you know I’m all about the numbers (see below for proof). And I’m not going to sugar coat things. Interest rates are on the rise, and inventory is low. But there’s a happy zone in the middle. With savvy sellers lowering their asking price in response to market realities, a buyer with a game plan could score a deal.
