There are times when I think it is important to spread the word regarding any likelihood of significant changes in our real estate market and I sense that now may be the time to do just that.
Barring any significant economic events, real estate in California historically tends to run in 6-8 year cycles. That is 6-8 years of rising prices followed by another 6-8 years of a mixture of plateauing and reducing prices, before the rising price cycle starts again.
What makes this particularly noteworthy right now is that we are into the 7th straight year of price increases. At some time in the not too distant future we can therefore expect to see a leveling out or even a reduction in real estate values.
This will probably happen very quickly when it does and it will most likely be triggered by a round of interest rate increases that will make it impossible for buyers to afford the home they want. So they will just stay out of the market.
As a result, housing inventory will increase to the point at which it becomes a buyers market again. Then we most likely have to wait for earnings to increase so more people can afford to buy, or for the government to reduce interest rates with a similar result.
Regardless of all this, there is no doubt that real estate is a great long-term investment, so if you don’t have any plans to move in the next few years, you should be well-placed for the future.
But if selling your home is in your plans, I think you may well be advised to sell sooner, rather than later. I don’t anticipate any sudden movement in the market this year but it is clear that we can see a number of interest rate increases coming along in the next few months and I suspect the 2019 real estate market may be very different from our present one.