It might be a good time to sell in Beverly Hills if you’re after a good price, but is it a good time to buy? With prices being impacted by the pandemic and temporarily stalling the market, the past two years have resulted in high prices with little supply.
Buyer demand didn’t relax
In the last half of 2021, experts forecasted that the quantity of housing would increase, and buyer demand would decrease. With some signs that the price hikes were slowing, in November 2021 it began to reaccelerate again. Buyer demand didn’t relax, and the number of houses listed for sale dropped instead of increased.
It was a good time to sell
According to the Fannie Mae Home Purchase Sentiment Index (HPSI), January saw a drop in points, bringing it to 71.8, which is its lowest since May 2020. With supply and affordability limitations appearing to be the issue, the survey revealed only 25% of respondents believed it was a good time to buy a home, compared to 69% of consumers reporting it was a good time to sell.
2022 housing market will increase by 13.6%
The real estate marketplace Zillow forecasts that the 2022 housing market will increase by 13.6%, while Goldman Sachs predicts even higher at 16%. In comparison, however, CoreLogic believes the home price increase will be much smaller at 2.2%.
Although job concerns and household incomes aren’t the leading reasons behind this real estate debacle, there are concerns that this pandemic boom will continue in areas that are sought-after and kid-friendly, such as Beverly Hills. Experts assumed that with the potential ease of the pandemic, many sellers would list their property, but with the omicron wave crashing down, the market appears to be doing the opposite.
So why, when things appear to be too pricey to get into the housing market, would buyers want to jump in right now?
Real estate inventory
The current market has turned open homes into a cut-throat battle, where buyers are having to outbid and one-up one another to best impress and increase their chances of landing a home. With an overall balanced market often having between four and six months of supply inventory, the concerning reality is that real estate inventory supply is less than two months.
From 2020 to 2021
The American housing market has risen by a total of 17.5%, which is huge. Going up against multiple offers with such a small amount of supply is home-selling gone crazy. Buying in the Beverly Hills area means that you’re likely to be paying more than the asking price. The market is so inflated and competing against those cashed-up buyers, that it’s nearly impossible to get in.
This has made first-time home buyers concerned, questioning whether they should dive in now or wait a year or two in case prices drop. But it’s being said that it’s best not to try to time the market. If you’re ready and you can afford it, buy it. Waiting on the expectation that prices will drop in the next year or so could leave you feeling highly disappointed. Nevertheless, if you’re unsure or uneasy about spending so much, it may be best to revisit your financial position in a year to reassess.
However, if reassessing your financial position appears like the safer alternative, you may need to think again. 2022 statistics for rentals in Beverly Hills suggest that it is the most expensive city for one bedroom, coming in at $2680, according to the Zumper Los Angeles Metro Area Report.
In relation to purchasing, already a concern is the ever-shifting state of home loan rates, which are a significant factor here. Even a difference of 1% can alter the state of supply in the real estate market. With interest rates hitting nearly 4.5% as of the week ending March 25th, people believe interest rates may be going to rise further, which will see more and more sellers putting their property on the market. It’s expected that the Federal Reserve is going to raise rates several more times throughout this year.
With high house prices and high-interest rates, there is a possibility that there may be more inventory available. This could possibly mean there’s more chance the market may rebalance slightly. However, if interest rates go down, we’re likely to see supply staying where it is.
With the best time to buy a house being when interest rates are low, people are in a challenging position. Buy now, while interest rates are lower than predicted and supply is low. Or wait and buy if the rates increase, which means the possibility of more supply and therefore lower house prices.
Another less obvious concern for overall price hikes is the supply-chain shortage for housing materials, which was predicted to ease but hasn’t. Gas and food price rises, the pandemic, and even the war in Ukraine have seen builders dealing with shifting prices for materials, resulting in not only price increases, but building delays. Although this may be a concern when it comes to the home deficit situation, this is a long-term resolution for a regularly fluctuating market.
2022 is looking to be a year for sellers rather than buyers
The concerns about the rising house prices in the real estate market around Beverly Hills are legitimate concerns. From the obvious lack of supply, trepidation around the pandemic, interest rate shifts, and supply-chain shortages for housing materials, 2022 is looking to be a year for sellers rather than buyers.
There is no perfect moment
Nevertheless, there is no perfect moment to dive into the housing market or no optimal point when housing prices may drop. You will always have experts that say one thing while others say another. One thing is for certain, the current market cannot be sustained forever. Therefore, the most important thing to be considering is whether you’re in the right financial position to purchase today. If so, now is as good a time as any to jump in.