July 2020 Market Update
It's been over a month since our last post so we wanted to provide a Market Update. To reiterate our position, The McGill Team works with lots of buyers and sellers and we aren't cheering for prices to increase or decrease, just crunching numbers so that we can best advise our clients.
Are we in a Buyer's or Seller's market?
In order to determine the state of the market, we need to look at the number of months it would take to sell all of the homes currently listed for sale if no new homes hit the market (months of inventory). If the number is five or less, we’re in a Seller’s Market. If that number hits six to seven months, our market is transitioning. Eight months or more is a Buyer’s Market where price decreases are likely.
As of July 1, there is 1.09 months of inventory in Sacramento, Placer and El Dorado Counties meaning that we are in a Seller's Market. Here's a look at the top 15 cities by number of active listings:
Does this mean it's a bad time to buy?
While there will be competetion for homes due to tight inventory, interest rates are at historic lows making this a good time to buy. If you are interested in buying, our clients consistently win in multiple offer situations (and it's not all about price)!
What's going to happen with the market for the rest of this year?
This is only slightly revised from our last forecast:
- Inventory (Supply) - The number of homes for sale will remain low as we are now past the peak selling season and the pandemic is still in play. Up to 80% of homeowners that are adversely affected by the pandemic have the option of mortgage forbearance for up to a year. Without the need to make payments, there will be no distress amongst this pool of homeowners and they will have a disincentive to sell.
- Buyers (Demand) - While the pool of buyers has decreased due to the economy, layoffs and market trepidation, overall demand will remain strong. Demand is also fueled by people exiting the Bay Area and choosing the Sacramento Valley. Especially at the low to mid price segments of the market we will continue to see multiple offers and homes selling at or above list price.
- Prices - Prices will increase slightly for the remainder of the year as months of inventory will be low and we will continue to be in a Seller's Market. Prices will be further supported by decreasing interest rates and a return of lending products that were temporarily unavailable.
Please keep in mind that these are only predictions and we will continue to analyze the data and adjust our market forecast as necessary. We'd love to get your thoughts, so please reach out to us to schedule a time to talk!