In every market, investors and homeowners alike are trying to get an idea of the direction of the real estate market. “When can I sell my home for the most money?” “Is the market going up or down?” are questions I hear from homeowners and landlords all the time. Is it time to sell your Chico home? No one can know for sure, but I’m seeing signs we may be nearing the top of the market within the year.
Since January 2020, there has been a 23.37% increase in the median sold home price in the Chico, Ca real estate market. Coupled with an interest rate increase of 31.40% since January of 2021, homes have become much less affordable.
As interest rates increase, buying power declines.
While interest rates aren’t the only factor in determining real estate market direction, it adds to the equation. Over the last year, mortgage applications have declined 52% year over year for refinances, and purchase applications are down between 10% to 12% year over year. Over the last year, buyers just pushed through rate increases, but now they’re starting to pull back.
If rates continue to increase, and it looks like they will, this will affect the demand for housing.
Here are some other factors to consider.
Inflation is at a level not seen since 1982. Everything is more expensive. Food, gas, travel, building materials, and durable goods have gone up in price.
Natural gas prices have been increasing steadily since 2019 and spiking here and there, making ownership costs more expensive.
As a result of inflation, the Consumer Price Index rose from 5.4% to 6% year over year. It feels like the perfect storm all happening at once.
While the economy is overall excellent, can it withstand increasing costs? At some point, consumers will have to pull in the reins on spending.
For instance, wages have only increased by .4% over the last year. Considering the CPI increased .6% over the same period, most wage-earning Americans effectively make less this year so far than they did last year.
So what’s this mean for the housing market in Chico, Ca? We could begin to see demand for homes waning, and when that happens, the supply of homes could increase. More supply and less demand could start to put downward pressure on home values. It’s just simple economics.
If you’re thinking it’s time to sell your Chico home, it may be best to consider this your year to get that done before we see a reversal in the market, more homes for sale, longer on-market time, and a downturn in home prices.
I’ve been selling real estate in Chico, Ca, for years, and if you’re thinking about selling this year, please don’t hesitate to call me or click here for my contact page. I’ll respond personally and promptly.
Thanks for visiting!