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The Cost of Waiting in a Shifting Market

You have likely heard and read it plenty - the market is shifting or supposed to shift.
What does that even mean and are we seeing any signs of a slowdown yet?

For the past 5+ years most of the US, especially Southern California has been a sellers' market. That means more demand for houses than supply and hence rising prices. Outside of price, days on market (DOM) is a good indicator of market conditions. The shorter houses sit on the market, the higher demand is.

Here's a look at these two indicators for Monrovia in 2018.

median house price.JPG
days on market.JPG

As we can see, the median price hasn't really started to decrease, nor has the time houses are listed for sale increased. Both of these would be indicators for a turning market. 

At least for our local market, there is no shift as of yet.

What has shifted though and will reportedly keep shifting, is the mortgage interest rate. Throughout 2018, we have seen increases from 3.95% to 4.85% (Freddie Mac 30yr fixed). 

mortgage interest rate.JPG
Should you be waiting for the market to shift?

Here is an example calculation that assumes Monrovia's average home price of xyz and a typical, 30yr fixed interest mortgage. The question we need to answer is - how much do you need to save on the purchase price, to pay a lesser total, even with rising interest rates. This is still assuming that house prices in your local market are actually going to decrease.

Calulation A.

It is impossible to forecast if and by when prices start to decrease - but as you can see in the calculation above, house prices would need to fall by some 10-15% in order to actually save you money, assuming that you buy using a mortgage.

Why "right now" is the perfect time

The months between November and March are typically the slowest time of the year. While we don't have snow or other weather phenomena that would cause that, the reason is rather simple​ - during these months people want to focus on their family and the holidays, which means the willingness to sell, is more apparent. Nobody likes to schedule showings or move when they have holiday plans! QUOTE/LINK

Our local market in Monrovia has still over xx houses listed for sale as of this post providing you with a great selection of houses to choose from.​ At the same time, the holiday season is approaching big time. 

A high number of listings on the verge of the slow season means there's a great chance for you to score a good deal at current interest rate levels.

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