A Quick Guide: Understanding the South Bay Housing

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Market Trends

You hear it on the news all the time: ”It’s a buyer’s market,” “It’s a seller’s market,” or “The housing market is on the rebound.” And while you probably get the gist of what these folks are talking about, having a deeper understanding of the South Bay housing market and how it works can help you immensely during the home buying or selling process.

Let’s start with the basics

The housing market refers to the general market of houses being bought and sold between buyers and sellers. These houses are either bought or sold directly by owners or indirectly through brokers. Like any market, the South Bay housing market is governed by the law of supply and demand. When demand is high and supply is low, the market appreciates. When demand is low and supply is high, the market depreciates. We have seen some significant appreciation in our local market.

How inventory affects value

In the real estate industry, we think of supply and demand in terms of available inventory. You can measure inventory by answering the following question: At the current pace of sales, how long would it take all of the houses available on the market to be sold? As inventories rise, home prices tend to decline. This is because as inventories rise, so does the competition amongst sellers, which drives prices down. Right now there is not a lot of inventory.

The difference between a buyer’s and seller’s market

 A buyer’s market is associated with longer inventory periods. As homes sit on the market for longer and longer, sellers become more and more flexible with their prices. This is great for buyers, as they usually end up getting a good deal (hence the term “buyer’s market”). In contrast, a seller’s market is associated with shorter inventory periods. Homes sell rapidly, giving sellers a lot of pricing power (hence, it’s a “seller’s market”). Right now we are in a seller's market, historically speaking.

Keep in mind that as with other markets, the housing market is cyclical: There are periods of rapid appreciation followed by periods of stabilization or depreciation. By studying the South Bay market, you can learn to foresee such trends. Call me and I will to a market assessment of your particular property or the type of property you are looking for.

Call me at 310-714-9703 or email me at joemcmahon@kw.com .