Why Are Sellers Reducing Home Prices in California?

by ZINC Financial
2 months ago
294 Views

A few different shifts are afoot in the national housing market, and those shifts are leading some forecasters to say that the housing market is “softening,” which isn’t necessarily a bad thing. Let’s take a close look at the numbers and some of the biggest trends affecting the housing market right now to get a sense of how house flippers might be affected.

Sellers are reducing their asking prices.

Particularly in hot west coast markets like those found in Washington and California, home listing prices are starting to drop. In the four-week period from mid-August to mid-September, more than one quarter of homes listed for sale dropped their price by at least one percent, according to data out of Redfin. That marks the highest level of dropped prices since Redfin began tracking the metric in 2010.

Home prices are still up.

At the same time, home prices were still up 5.5% annually in California compared to the previous year, though the month-over-month increase did dip from June – when it hit a record high.

Mortgage rates are going up.

The average rate for a 30-year fixed mortgage is approaching 5%, which hasn’t been the case in nearly a decade. While 5% would have seemed like a perfectly normal rate a few decades ago, it’s feeling quite high to potential buyers who remember rates around 3% in the wake of the housing crash.

Supplies of new homes increased year-over-year for the first time in three years.

As of August, the first real sign that the critical housing shortage may begin to resolve itself appeared. New homes on the market went up, marking a shift that has long been in the making. New homes – condos, apartments, and single-family homes – should help take some pressure off the housing market.

What does all of this mean for house flippers?

Altogether, hopefully, it means that we’re not in a housing bubble and that the market is stabilizing itself. While no seller likes to see listing prices drop, the drops are a direct result of higher mortgage rates, a growing supply of new homes on the market, and the natural cycle out of the hot spring/summer season and into the quieter period of fall/winter. Anyone looking to list a flip on the market this month may not get an overwhelming rush of bids, but the average time on the market is still well under a month in California at just 21 days.

And for those rehabbers looking for new properties, this may be the perfect time to pounce. With the right house flipping loans, you could find an ideal property in an up-and-coming neighborhood or even a luxury property in need of some refurbishment up in San Jose or San Francisco and have it ready to show at or before the start of spring.

Whatever your flipping strategy, remember that ZINC Financial provides a variety of residential rehab loans for both large and small budgets and both new and experienced flippers. Give us a call to discuss the current housing market or to learn more about our loan programs.

Tags: , ,