Question:
“My wife and I were looking for a home a few months ago and gave up. We were tired of making offers and losing out to higher bidders and cash buyers. But I’m seeing a lot more for-sale signs. Do you think the market changed?”
Answer:
Yes!
While most of the media is months behind on this story, the housing market has clearly shifted from an overheated seller’s market to a “normal” market with a rough balance of buyers and sellers.
Why?
Simple supply and demand.
San Diego’s housing market crashed and overcorrected from 2006 through 2011, leaving prices unusually low and attractive.
In early 2012, the market psychology reached a tipping point from negative to positive, and a wave of people started buying homes:
- Buy & hold cash investors
- Cash flippers
- Normal homebuyers
Sometime in 2013, the buy and hold investors stopped buying en masse due to higher prices knocking down their returns.
Then in late spring / early summer, with bargains drying up, flippers and homebuyers slowed their buying.
At the same time, more homeowners A) finally liked the price they could get or B) were finally able to sell after having been upside down for years. So more homes have come on the market.
Said another way: demand decreased and supply increased to what most people would say is a balanced or normal market.
