Facebook is going public in a mere 15 days. Once it does, there will be hundreds of newly minted millionaires just clamoring for your home. Or at least that is what the press and a many real estate agents want you to think. So if you are thinking of selling your home and have flexibility, now may be the time to put your home on the market rather than waiting in anticipation of future riches that may never materialize. Here are three reasons why:
Currently Housing Inventory is Low –
The Los Altos real estate market has always been inventory driven. Typically, when single family home inventory spikes above 100 active listings, it is a strong buyers market. Conversely, when inventory drops below 30 homes for sale, it is a strong sellers market. Right now we are hovering around 45 active listings or a little over 2 months supply of salable homes. It is strong seller’s market currently.
If enough sellers “time the market” by waiting until the newly minted millionaires cash in on their stock windfall, we may actually see a huge increase in inventory resulting in an unforeseen buyer’s market.
Continued Strong Buyer Demand –
Buyer demand is higher than previously seen. More than two-thirds of the homes that closed escrow in Los Altos in the Month of April had multiple offers. Most of the over bids were in the 100k-130k range but a few topped 300K. Since January, multiple offers have become the norm rather than the exception.
Rather than wait, some of those who will benefit from their company going public have already joined the ranks of home buyers – only increasing the current demand for good homes.
Continued Low Interest Rates –
Twenty-six of the homes that closed escrow in April in Los Altos had financing. Even buyers who can pay cash, are financing. If they used cash to make the initial purchase, they are refinancing because the cost of money is historically low. Buyers are cashing in on the low interest rates by buying and/or refinancing now.
Today’s newly minted millionaires have learned from the “Google Effect” era millionaires. They aren’t going to rush out and buy a house just because they can. Sure, there may be a few who aren’t familiar with having and/or managing large amounts of money who will go out and buy a trophy house. But my bet is that those are few and far between. Many will buy, but when they do, it will be a careful and well thought out lifestyle or investment decision.