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Six Real Estate Trends To Watch This Summer
To help aspiring homeowners understand the shift in the markets, the team at Prevu Real Estate compiled a list of trends buyers need to watch this summer.
Rational Markets Return
Local residents craving more space, coupled with historic low-interest rates, drove a buying frenzy across California over the past year.
House prices rose by more than 20% across California since early 2020, and by more than 25% across many sections of Los Angeles. But after months of bidding wars and fruitless home searches, some home buyers have chosen to wait for a return to rational home pricing.
While inventory remains tight, buyer’s agents are seeing competition ease, and instead of 20 offers on a property, buyers compete against two or three other interested parties.
Fatigued Buyers Enjoy The Summer
The rising prices that defined 2020 and 2021 spring buying season have begun to plateau, and many Los Angeles homebuyers are taking a rest from all of the competition. After losing out on several offers due to bidding wars, buyers making all-cash offers, or just bad timing, a portion of buyers are sitting out this summer.
In addition to buyer fatigue, it is important to keep in mind that this is the first summer since 2019 that L.A. residents can travel without restrictions again to enjoy a nice vacation. This has resulted in less competition for properties hitting the market and allowing persistent buyers to have higher probability of success in the summer months.
Inventory Remains Constrained
Many sellers want to get the best price for their home, but not if it means having to reinvest most of their gains into an overpriced house. Despite the opportunity to capitalize on the recent appreciation, some California homeowners have waited to sell their home out of fear of having to compete for their next home.
As a result, these potential sellers are enjoying the summer and waiting for the real estate market to find an equilibrium before selling this fall, meaning a continuation of tight inventory available for buyers.
Commission Rebates Go Mainstream
High prices defined the frenzied markets over the past few months, pushing Californians to get creative with their offers. But savvy buyers that researched and interviewed multiple brokers discovered a money-saving concept that improved their buying experience with huge savings.
Enriched by commission rebates, L.A. residents put money back in their pockets by receiving a portion of their broker’s commission. Legal in 40 states, including California, commission rebates allow brokers to give a portion of their commission to the buyers they represent.
Prevu Real Estate rewards buyers with the largest commission rebate in Los Angeles — totaling up to 2% of a buyer’s home purchase price.
Return To Work Matters For Buyers
The concept of the American workplace changed in 2020, suddenly thrusting Americans into their home offices and leaving people scrambling for larger houses to accommodate the ability to work remotely.
Fast forward to today, employers are putting return to office plans in place, and the convenience of working from home is shifting to a hybrid in-office schedule or full return to office daily.
This migration back to the office is causing a reshuffling of the locations homebuyers are focused on. The pendulum of demand is swinging away from the suburban surge of six to 12 months ago and back toward areas closer to downtown L.A.
Interest Rates Remain Historically Low
While the U.S. economy forges a path of stable, economy reopening/recovery, interest rates on mortgages remain low. Interest rates for 30-year mortgages sit below 3% and 15-year mortgages hover around 2.25%.
As such, Los Angeles home buyers continue to have the huge financial incentive of low borrowing costs to pursue home purchases. Whether a first-time buyer entering the property ladder or experienced buyer upgrading their residence, there is still the opportunity to lock in a low mortgage rate on their dream home.
Prevu Real Estate, Inc. is a licensed real estate broker in California, license number 02134758.