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Who Benefits From Declining Home Sales?

The housing marking in Southern California has said to hit a downturn, with home sales decreasing by almost 18 percent from this time the year before (according to CoreLogic's October report). Causes can be related to rising mortgage rates, higher prices and deteriorating affordability in the area - all of which have been rising for some time now.

This is the biggest reported sales decline in nearly eight years. Although home prices are still rising, capital gains are shrinking, convincing one market analyst to claim the hot seller’s-market we've been experiencing appears to be coming to an end.

So what does that mean?

Depending on what side of the fence you are on will determine your perspective. As a prospective buyer, you may be breathing a sigh of relief. If you are considering selling or currently have your home listed, you may start to feel the panic creeping in. However, let's not get too far ahead of ourselves.


Let's start from the buyer's perspective. As the market begins to slow, this could mean more negotiating power for you. The longer a property sits on the market the more willing a seller may be to drop their price. With the rising interest rate, this could limit the amount you can negotiate for, but you will have a bit more leverage than if we were still in the seller's-market.

However as mortgage interest rates rise, it should not deter you from buying. From a historical point of view, a 5% mortgage rate is still exceptionally low, and a 30-year fixed mortgage today is still much cheaper than historical comparisons (according to Freddie Mac). The annual average rate for a 30-year fixed mortgage has not reached 5% since 2009. Just think, in 1986, the average mortgage rate was 10.19%!


As the market enters a downturn there is no need to panic. As before mentioned, the rise in interest rates negatively impacts a buyer's affordability. In turn, that potentially causes a decrease in the value of your home as well. The keyword being "potentially". Not all buyers are impacted by the fluctuation of interest rates. If your property shows well, is in a desirable area, and priced accordingly, you can still get top dollar for your home. Value and worth vary greatly in meaning among buyers. What they are willing to pay more so depends on their perception of their personal beliefs of value than what the market may indicate.

Now more than ever is the time where sellers need to enlist the services a quality real estate agent. A good agent will ensure that your property is marketed in such a way that top-value is construed to all potential buyers.


Let's not over react. The market may be slowing down and prices may be on the decline, but that means we are entering a balanced market. Not a "crashing market". Prices and sales volume had been on the uptick for a long period of time. One period of decline doesn't indicate a catastrophe, just a sign that the market may be coming back to earth.

If you're considering purchasing a home, now is still a good time to do so. As before mentioned, today's rates are still great compared to those in the past. Just be sure to hire a quality Real Estate Agent that understands the market and can help guide you through the buying process.

If you're considering selling your home, do not be afraid to list your property. You never know who is interested in your home and what they are willing to pay for it. By hiring the right Real Estate Agent you can better your chances of quality exposure to potential buyers that are willing to pay top dollar.

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