Spring Home Buying Market
This year’s spring home-buying season is when the frenzy typically kicks off for the year, appears to be off to a slow start—particularly in and around some of the nation’s most expensive, coastal cities.
That’s because for the fifth month in a row, the number of homes on the market surged 6% in February compared with the same time the year before, until last year the nation had seen several years of housing shortages.
It suggested that the housing market is starting on a cooler footing this spring than last spring. That’s partly a result of the long-term housing shortage that pushed prices up so high, fewer people were able to actually buy a home.
The big, pricey, tech-fueled cities on the West Coast saw the greatest influx of homes on the market. The nation’s most expensive market, Silicon Valley’s San Jose, CA, experienced a 125% jump in the metro area in February compared with a year earlier. (The metropolitan area includes the main city and the surrounding suburbs.) The median home price in the metro is a whopping $1,079,800—and that’s down 10% from the previous year!
That sky-high price tag is one of several reasons buyers suddenly have more choices in Silicon Valley—if they have the means.
Prices are so high there that even with a high-paying job, it’s difficult to afford homes. Therefore, residences are taking a little longer to sell.
Builders are definitely trying to build in that area. Buyers are being a bit more hesitant to purchase properties, while existing residents who are thinking about downsizing or retiring or moving somewhere else think now is a good time to put their home on the market, while home prices are still high.
Overall, the most selection is on the high end. The number of homes priced at $750,000 and above shot up 11% year over year in February.
That’s because cheaper properties are most in demand, so they sell fast. And there simply aren’t as many buyers with large-enough bank accounts to snap up the pricey homes.
Sellers hoping for big paydays across the nation have been forced to lower their expectations, and their asking prices, over the past few months. Home price appreciation had a good run after rebounding from the recession, but eventually rising mortgage rates boosted buyers’ costs to a point where too many folks were simply priced out of the market.
The market is slowing, and sellers are being a bit slow to adjust. Just because a market is seeing price cuts doesn’t mean prices are actually falling. It could just be a sign that sellers got a little too ambitious in their initial price.