Are we experiencing a shift in the market place? Has the bubble finally burst? Should I sell now while the market is still strong? Should I wait to buy in case prices drop?

We are seeing a slight shift in the market place, it is not a dramatic shift and it still remains to be a strong seller’s market. We are seeing a bit more inventory on the market however, this is inventory that is very obviously overpriced and is simply not selling. Sellers who are concerned that this may be the top of the market without a lot of motivation to sell will put their own subjective view of what the property is worth and are testing to see if the property will actually sell at this price. Usually, even the most desperate exchange buyer whose clock is ticking to purchase an upleg within the allowed time period will most likely take the hit and pay taxes instead of purchasing an upleg which is grossly overpriced. Buyers appear to be a bit more cautious about overpaying than they were a year ago, questioning if in fact the market is shifting, perhaps it’s just wiser to wait and see.

Interest rates continue to fluctuate with the continued speculation and awareness that rates will eventually increase; however, there is currently not a dramatic increase in interest rates. Prime lending rates increased by a quarter point to 6.25% which will most likely result in higher costs on home equity loans and other debts. There have not been as many home sales however; there has not been much inventory of single family homes in order to really define an accurate pattern.

The overall economy in Southern California is still very vibrant and strong with many of the jobs tied to the real estate industry. Speculation continues that in an economic downturn we will experience a surge of unemployment as a result of so many of the jobs dependent on the real estate/construction industry. An economic downturn will naturally affect sales of single family homes accompanied by more realistic verses “projected” market rents in the multi family sector which will effect how these properties are valued.

Lots of brand new faces have entered the market which is always common in a strong market, the desire to make a “fast” buck. New players are always welcome and can add a brand new vitality and energy however, the success of professionals in the industry is in direct correlation to those who survive and persevere in a weak market not just when the fruit is ripe. Remember this is still a service industry based on professionalism, strong ethics and ultimately the knowledge of the industry. Do not underestimate or discount the price on knowledge and experience when choosing who you want to represent you and work with in all areas related to a transaction. Lots of marketing tools are being geared toward “this is the end of the bubble, get out before the sky falls, sell your building now,” while simultaneously the same source generating these marketing materials will push buyers into “purchasing now before prices become completely unaffordable.” An honest and ethical broker in the course of servicing the buyer and/ or seller should inquire about the client’s motivation; asking questions about why the client is buying, selling and what are the long terms goals and objectives. One of the best services that a broker can offer is to sometimes guide a buyer and/or seller not to buy or sell when it simply does not tie into the individual’s goals, objectives or current life situation.

Is the market shifting? Should you buy in this market? Should you sell in this market? Should you wait and see? What are your goals? What are your objectives? What is your current life situation? And most importantly, how does all this tie into your life shift and your life cycle?