The numbers are out for February 2014 and the figures show the Northern California real estate market continues it’s unprecedented roll of strong demand with very little supply causing many closed sales for the month many times to come in above asking price for many single family homes. Condo-townhouses, which were in very short supply, are also coming in strong in regards to sales price versus list price.

Where is the market today?

There continues to be a much bigger demand than the supply of homes available. More and more buyers are waiting for homes, bidding higher than list price on many of them and continuing to drive prices through the roof, pardon the pun.

The fact is that there WILL be more homes coming in the market as we head into spring and home sellers will see a little more competition. But there will continue to be more buyers looking for homes so the supply will still not meet the demand at any time in the near future.

Where are we headed?

The real estate market will go where interest rates go and right now rates continue to be low and are averaging under 4.5% for a 30 year fixed rate loan. Expect rates in the near future to move up and down a bit, but not by much.

However, many economists are predicting a stronger job market and lower unemployment rates over the next 12 months, according to Bankrate, which surveyed 12 economists recently. In January 2014 the unemployment rate was sitting at around 6.6%. Economists are expecting the unemployment rate to be around 6.2% over the next 12 months, which would be the lowest levels we have seen since before the crisis.

What this all means is that at some point the low unemployment rate and improvement of the economy will eventually cause an increase in interest rates as rates usually follow what the economy does. Better economy = higher rates. Tough economy = lower rates.

But right now expect more of the same as we are seeing today through the year.

The urge to price too high

One of the things that I am seeing a lot more recently are homes being put on the market at ridiculously high prices. This is one of the worst things a home seller can do as over-priced homes stay on the market longer, end up selling for less and actually help your competition sell their homes because their homes suddenly look like a deal when they compare them to overpriced listings.

Don’t do it. Price your home accordingly and let the market dictate what it is worth.

Today’s Biggest Home Seller Fear

There are a lot of homeowners wanting to take advantage of the low interest rates and the equity that they have now built in their homes and want to make a move, but they are afraid to do so because they fear not being able to find another home. It is a very legitimate fear.

However, one of the ways to combat those fears and create a “safety net” would be to put their homes on the market and sell their home subject to the sellers being able to find a replacement property within 15-30 days. This is a clause that has been around forever, but yet so few people know about or use. Sure, it does cause some anxiety among home buyers who want to know if they are buying your home and may not know for another 30 days while sellers are looking for another home. But buyers are not as picky today and are willing to wait and be patient if they want your home.

Don’t be afraid to use this clause. There are many things you can do to ease buyer’s fears about allowing a clause like this such as:

  • Fill out and make available all necessary disclosures immediately
  • Have inspections done on the home by a reputable inspection company

 By having the disclosures and inspections done before you accept an offer, you could eliminate one of the main reasons why transactions fall through and that is conditions that buyers discover while in escrow. Once a buyer sees the disclosures and inspections and they are comfortable with the findings, they know they want the home and all you need to do is go find another home.

Work with an agent that is not afraid to work

One more suggestion would be to work with an agent who is not afraid to knock on doors in the neighborhoods that you are looking for and who can reach out to other agents and offices to inquire about homes that may be coming on the market. This is crucial to your success as it creates energy, activity and opens doors for you that may not be opened for others by working with an agent who is not afraid to make things happen for you.

All in all, things appear to be going according to plan and according to the reports that I have been writing for several months. The biggest home buying season is right around the corner, even though for many it has already been here for quite some time.