According to the California Association of Realtors, first-time home buyers look for different things in a property than repeat buyers do. Californians list rental fatigue as the single most important reason for buying a home. From those who are trying to move up, it’s a size upgrade, followed by a location improvement.
First-time home buyers are who allow repeat home buyers to move up to the next home and continue the domino effect into the higher-priced homes. This chart to the left provides an interesting look at the different reasons different types of buyers want a new house.
On average, first-time home buyers will stay in their first home between 5-7 years. The reasons for eventually selling vary, but often it is because of the addition of new members to their family, or the search for more space, good schools and a neighborhood where home owners can see their kids riding bikes and being part of a safe community.
I recently listed a past client’s home who bought 3 years ago. When she called me, she said, “Kristin, you were right. We are ready to move.” When they bought their home, I told her they would be there maybe for 5 years and she adamantly said we will be here for a long time. Do you have a similar story? Are you outgrowing your first home?
As promised, I said I would write a couple of blogs from a Carol Rodini speaking event I attended. The first blog gives her thoughts on how China and Saudi Arabia may affect the real estate market in the coming months. Today, we’re discussing a general Bay Area real estate overview.
Carol said that we (in the East Bay) are usually 6-8 months behind the other side of the Bay – meaning San Francisco and the Peninsula. What is currently happening there (and we may see this in the later part of the year) is that the media is reporting a growth of inventory. This type of news has adverse effects on real estate. In reality, there are two types of real estate: desirable and non-desirable. The media bundles them together, but Carol pointed out how they are different.
Prices have gone down on high-end properties, and buyers are getting hesitant and willing to stand by and watch what happens. For example, a house in San Francisco that was listed for $1.5 million sent out 30 disclosure packages. One buyer submitted a pre-emptive offer of $1.75 million all cash and the seller didn’t take it because they thought they could get more and wanted to market it a bit longer. On the offer due date, none came in. So they went back to the cash buyer and that person said no.
A few takeaways:
1. You can’t be over-priced in this market.
2. Buyers in the city are no longer playing the competition game.
3. Sellers need to be aggressive with their pricing, by pricing it slightly under market. The reason? Millennials buy with their stock options. And with the market volatility and changes, this is making them a bit more hesitant.
The East Bay will have a great spring. We traditionally see a bit of a slow-down in the summer, and depending on what the stock market does, we may follow in the steps of the city. Our average price point is much lower and we are seeing a bunch of first-time home buyers that can’t afford San Francisco or the Peninsula who are looking at the East Bay – at least until the prices drop on the other side of the Bay.