I’m sure you’ve heard the term “supply and demand,” but how does that affect buyers and sellers as we approach the spring and summer selling season here in Orange County?
In a nutshell, supply and demand means the less of something there is, the more valuable it becomes. Let’s say you’re dealing with wine. When a new wine is released, there’s a lot of it, but as the vintage gets older and older, there’s less of it to go around. Once you get down to the last case, it becomes extremely expensive.
If you’ve been following this video blog, you know that inventory usually drops in November as we approach the holiday season and stays low through early February. Generally, it will start rising after Super Bowl Sunday, rise again in March, continue to grow in April, and then significantly rise in May and June. June, of course, is the summer selling season and the time everyone assumes is the best opportunity to sell a house. The reality is, this is actually the best time to buy a house because there are more homes on the market.
If you’re a seller, you want to sell when there’s not a lot of competition. If you live on a block with five other homes for sale, buyers will leverage those homes and yours against each other when they make an offer. If your house is the only one on that block for sale, however, it’s worth potentially more to buyers because it’s their only option.
I talk to a lot of people who tell me they’re interested in selling but want to wait until spring or summer, and this always raises some concerns with me. If there’s a specific reason they need to wait, then perhaps there’s no way around that. If they’re just planning on listing in the spring or summer because they think that’s a better time to sell though, then that’s an incorrect strategy.
If you’re just waiting for the spring or summer market to come before you list your home, you may want to talk with a Realtor and understand what’s happening in your micro-market. Every pocket in Orange County has different trends, so you don’t want to wait to sell only to find out that there are three or four other properties listed right alongside yours. That will devalue your property. List when there is low inventory and less competition so there’s more demand for your property and a greater chance to sell for top dollar.
If you’re a buyer and you’d rather wait until April, May, or June when inventory has grown to make your move, there’s nothing wrong with that approach. I do encourage you, though, to stay on top of what’s happening with interest rates. If you have a preferred lender you like working with and have already been pre-approved through, they should be sending you weekly updates on interest rates. Why? If interest rates go up too high, even if you get a smoking-hot deal on a property, you still might end up paying more money per month for it.
Overall, we should see inventory increase over the next few months. As more properties come on the market, buyers will have more options, and sellers will have less demand for their properties.
Another scenario we’ve been dealing with lately is clients wanting to sell their current home and buy something bigger or smaller. If you intend to do the same thing, meet with a Realtor now so you can sell before inventory grows and buy when you have more options. The savvier sellers we work with usually list their homes in February, March, or early April so they can catch the market before it gets too active.
If you have any more questions about how supply and demand will impact our market in the coming months or you’re thinking of buying, selling, or investing in real estate, don’t hesitate to reach out to me. I’d love to help you. Until then, happy selling!