If August home sales numbers were any indication the market is continuing to go crazy, but from on the ground experience the South Bay real estate market is beginning to slow down a bit. There are likely several factors that seem to be driving this slowing market:
- Seasonal changes: The market always slows a bit once schools are back in. Summer home buyers eager to get a home in certain school districts keep the market buzzing in June, July and August.
- Interest rates: While still historically fantastic, it’s taking buyers a little while to grasp that we’re no longer likely to see rates in the 3% range, or even the mid to low 4% range. Rates had to adjust and although rates are still tremendous, borrowers are still suffering from a lowest rates ever hangover. In time the current rates will become the new normal and buyers waiting on the sidelines will once again jump into the fray.
- Prices: August year over year prices in the area neared a 25% gain….in just a year. That’s a pretty incredible increase and between the increases and many buyers frustrated with a market stacked against them have decided to sit it out for a while and hope that we eventually reach a balanced market.
Whether all of this indicates a trend towards a cooler market, or is just a temporary correction remains to be seen, but either way 2013 has been one of the quicker rebounds in real estate that we’ve ever seen.