I reflect on the market over the years and it's always interesting to me. We try to predict what will come next and we're usually wrong. I know I'd return my crystal ball if I could. With that said, I wasn't completely wrong. We knew we were close to the peak and the Roseville home prices had to subside at some point; however, I thought prices were going to come down more. Who would have predicted rates going to 7% in 1 year?
It's been a been an exciting and productive year for me. I've done more business this year than ever before and still have 3 months left. The first half of the year I was doing 5-6 sales a month. Now I'm down to 1 a month. I'm not the only one to slow down! Title companies have laid off a lot of people, lenders are cutting back on their processors and underwriters. Our company function budget has all but dried up. Everyone is tightening the belt and for good reason. We're just now starting to see more doom and gloom predictions for 2023. This last fed rate raise sent shock waves thru the stock market and the real estate market.
It comes down to affordability! Rates nearing 7% will force prices down. Inflation is taking a bigger bite out of everyone's paycheck. Supply and demand is like gravity as both are extremely strong forces. Demand for housing is still strong, people need a place to live. Rents are still holding strong so that's helping to keep home values up, but I think affordability is going to push values lower in 2023. If you have the ability to save up some money, there should be some good deals next year. I'm already starting to see some short sales. We haven't seen any short sales or foreclosures in a decade.
I know of a large local Roseville home builder who had 21 escrows in August and 20 fell out. That's no bueno! The main reason why is that buyers aren't able to lock in interest rates when they first sign a purchase contract. When the house is build and ready to close the deal, the buyer needs to revisit the lender with the current interest rates. Buyers went from low 4's to high 6. A large enough swing in the rate to cause them not to qualify for the purchase anymore. Builders are doing everything in there power to keep prices up in the developments so they resort to offering to buy down the rate, more upgrades and full commissions to agents. Yes, we're again best of friends with the builders when the market goes down. Some builders weren't offering a co-op with agents there for a while.
I know of some land development projects in Orangevale, and Sacramento that will be available at discounted prices as land is a long term hold a downturn in the market occurs. There's hold costs associated with that and usually no returns.
My land development in Roseville is coming together. At the corner of Main St. and Porter, I'm mapping that for 10 lots. I'll have the tentative map and conditions soon. I'm currently awaiting the city's review of my plan. This will be a good project for a small home builder in Roseville.
Let's hope the stock market and real estate market doesn't tank like last time. Certainly different circumstances involved, but that's not to say we couldn't have the same result. My advise is to be cautious and conservative right now.
If you have a property or project you have questions about, feel free to give me a call.
Re/Max Gold - Chad Phillips
Roseville 2998 Douglas Blvd. Ste 125
Roseville CA. 95661
916-390-1476
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