One of the largest concerns when it comes to real estate is the case of overbuilding. What if there are new home builders that don't do their research then set out to build a bunch of homes.
Those homes may have had a particular price point assigned, but if they build too many, those price points are going to be restricted to ink only and not develop into actual greenbacks.
The Santa Clarita Valley has had limited real estate homes and inventory for the past several years. In fact, the buyers' markets of old have not been seen since late 2011 and early 2012. That was the bottom of the Santa Clarita market between the 2006/2007 recession and housing market collapse and now.
I will tell you that it's not the appraisal standards that are causing the issues. It's the high buyer drive and the restricted inventory.
Is it a buyer's fault, if they are capable and willing, wanting to write an offer on a home that is $70,000.00 higher than the listing price, which would far exceed appraised value? No, it's a free country and economy. Buyers are allowed to pay what they want when buying real estate.
They can pay as much as their financial profile will allow. The question is whether that is smart or not?
Could it be that home buyers are paying too much for real estate today? Or when the appraised value is not cared about on the buyer's side, and they agree in their original offer to pay what they offered, even if that amount is much higher than appraised value? Could that pose a problem?
If you ask any seller if this poses an issue, they will mostly say no. Most of the home sellers, at least those we have encountered as of late, are leaving the state of California to go elsewhere and find a home to buy.
There are very few markets in the country, where real estate is concerned, that carries the same high price per square foot cost as the Los Angeles real estate market.
Also, the Los Angeles market is always moving. There are a lot of people wanting to move and live here - earthquakes and fires/floods aside, the weather is hard to beat.
The price that can be gleaned is not where we California people are moving from. There are people buying those homes in droves - as you can see by the buyer demand the willingness to pay whatever it takes.
The problem that is being seen, and what is keeping our inventory from exploding with home sellers wanting us to sell their real estate, is we are moving to areas and paying a premium to do so.
This is blowing up other real estate markets across the country and making their inventory slim to none as well.
Hence, the home sellers that want to move from So. Cal. to Oregon, Idaho, Tennessee, and Florida don't have access to a lot of homes for sale.
Plus the locals love us people from California driving up their real estate prices which is causing their numbers to be higher than the local folks, with their current earnings and savings, can afford to spend.
They will tell you this, but won't say it making the record, but I hear from other professionals in those markets what's being said.
The fix, if you are looking for one, to the current market is going to be a loosing up of real estate and homes for sale in the Santa Clarita Valley. If I'm talking about the Los Angeles County real estate market, that statement can be re-posed by (insert city name) needs more homes for sale.
There is one area, that no one seems to be speaking about, probably because they are unable to keep up with Santa Clarita's home buyer demand.
That is new housing. The new home builders are working hard, hand over fist, but they cannot build new homes fast enough. There is a delayed-release and the next homes from buying to occupancy are months away - even the new homes by Magic Mountain will have 2022 occupancy dates.
However, if the new home builders were in a position to produce homes faster - they could, in theory, outrun the market and create the buyer's market that so many want to be.
I don't foresee that happening. I do, however, think that there is going to be a big deal about the forbearance coming to an end this June of 2021. During the first couple of weeks of July, you will see that some media outlets will be talking about the coming foreclosures - that may put the current market back on its heels a bit.
I'm Connor MacIvor with REMAX - Santa Clarita Home Experts. When you are ready, call me and I'll get you set up with the right questions to ask and what direction would be the best to take depending on the market at that time.
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