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Three Reasons We Are Still in a Seller’s Market
Manage episode 179061450 series 1213289
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Even though interest rates have shot up considerably since December, we are still in a strong seller’s market. Homes in the San Fernando Valley and Porter Ranch are selling quickly and we expect this trend to continue for the foreseeable future.
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One question that we’ve been getting bombarded with on pretty much a daily basis is, “Why are we still in a seller’s market if the rates have gone up dramatically since December?”
There are several reasons why the San Fernando Valley and Porter Ranch areas are still in a seller’s market. A few of them stand out in particular.
First, we have extremely low inventory. Right now, we have just 1.5 to 1.7 months of available inventory in most neighborhoods in the San Fernando Valley. In Porter Ranch, there are just about 60 properties for sale out of the 11,409 single-family units that are in the area. For comparison, there were over 300 properties for sale during the foreclosure crisis in 2008.
Secondly, you are seeing a situation where homeowners are moving up but not selling. They were able to secure such a low rate when they bought the property originally that it makes sense for them to keep it, rent it out, and qualify for a new home. As a result, there is less inventory coming on the market.
The lack of new construction at entry-level price points is disappointing.
There isn’t a lot of new construction taking place right now, either. Part of it is because of zoning laws, part of it is because there isn’t any more space to build out in the San Fernando Valley. The homes that are being built don’t cater to the largest pool of buyers in the entry-level market. This includes buyers who are coming back into the market after a past foreclosure and buyers who are coming from other areas in the market like Pasadena, Burbank, and Glendale. The latter group is getting a lot more bang for their buck in areas like Porter Ranch and Granada Hills.
Don’t anticipate anything changing in the near future. We should be in a strong seller’s market for a while now. Despite the fact that rates have gone up a bit, we are still seeing more and more buyers come to the market in order to lock in rates before they go up even more.
If you have any questions for us, don’t hesitate to give us a call or send us an email. I would love to hear from you.
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