There are certain areas of the country where it’s always a seller’s market. Manhattan, Seattle, and most recently, Denver, have all seen their housing prices soar as the demand for homes have increased. This comes as no great surprise to real estate analysts from the Bay Area or San Diego, who have been privy to a near constant seller’s market for decades now.
On top of a real estate market that has recently seen low inventory and high demand all across the country, San Diego remains among the most expensive cities in the US in which to buy property. In fact, it is second only to San Francisco. So if the rest of the country is seeing a seller’s market, what does that mean for places like the Bay Area and San Diego, where it’s always a seller’s market?
What This Means for Buyers
Buyers are entering the market looking at homes that are listing for somewhere within their price range, only to be outbid by another buyer who can afford the added cost. For real estate brokers, this is an ideal situation. In fact, a bidding war is precisely what they’re hoping for. That being said, it can be demoralizing, even heartbreaking, for potential buyers who fall in love with a home, only to find it scooped up by another buyer.
This current San Diego housing market is seeing properties go for an average 30% more than they’re being listed at. What is a prospective buyer to do?
What Prospective Home Buyers Can Do
Firstly, it’s important to realize that the home is being listed slightly below the market value for the sheer sake of generating a bidding war. That’s what real estate agents do. Their job is to get their clients as much money as possible, and they make money on the commission. Today’s market makes it very easy for them to do that, so be prepared to pay at least 10-20% more than the home is being listed at.
Part of the reason why prospective buyers aren’t being taken seriously is due to poor initial offers, or making a strong offer that is based on an appraisal. A seller’s market allows the seller to dictate terms, and these homes aren’t going to last very long on the market. If two buyers are offering the same amount for a home, but one is based on an appraisal, the one that isn’t is going to be the stronger offer.
Prospective buyers need to think like market analysts in a seller’s market. That may mean finding hidden gems in areas where there is less demand. But buying a home in America’s toughest housing market is still possible.