In California, the enthusiasm for real estate has continued into 2013. The state’s housing market posted its best January in six years, as the median price increased 24% and sales jumped 11% from a year earlier, according to California Association of REALTORS®. What is the reason behind the record sales and buyer demand? Recently, NRT, the company that owns and operates Coldwell Banker Residential Brokerage, conducted a Buyer Sentiment Survey* to find out what has been motivating buyers to jump into the market right now. The full results of the survey can be found here.
According to the survey, the three most common factors motivating buyers to look for a home right now are low interest rates (83%), change in life situation (60%) and the expectation that home prices will rise (57%). The expectation that home prices will rise is a very new sentiment to occur in the last 12 months. Michael Collins, a Coldwell Banker sales associate in Beverly Hills, believes buyer optimism is driven by economic improvement in both retail spending and job creation categories.
“The lack of inventory has created what may be a false economy, but there are always buyers who need to buy now,” said Collins. “With the lack of inventory, the urgency grows, a feeding frenzy begins and the property sells, in many cases, over the asking price. Hence, the buyer perception that now is the time to buy. Of course it doesn’t hurt that mortgage rates are at record lows.”
Jeff Stokes, a Coldwell Banker sales associate in Newport Beach, says he is seeing optimism for the first time in real estate since 2007.
“People feel the economy is improving and now they see proof that real estate prices are going up from last year,” said the veteran broker, who participated in the survey. “They do not want to be left out.”
In addition, 60% of agents reported that buyer confidence is increasing, across the board. The survey also revealed that 63% of agents found that home prices were increasing and 78% of agents found inventory to be decreasing. In Newport Beach, for example, Stokes said prices are up 10% from four months ago and 15% from last year, while inventory is down at least 50% from last year. Collins said prices in the Hollywood Hills are up by approximately 10-15% from a year ago, while the West Hollywood flats are up 20% from a year ago. He estimates inventory in these areas is about 50% down from the previous year. In the Bay Area, a similar phenomenon is happening.
If you are planning on purchasing a home this year, these agents advise that you seek the guidance of a knowledgeable real estate agent to help you navigate such a competitive real estate landscape. With a little patience, perseverance and determination, you could soon be unlocking the door to your new home and future in California.
* The NRT Buyer Sentiment survey had 5,865 responses.