Why Now is the Perfect Time to Buy Real Estate

Why NOW is the Perfect Time to Buy Real Estate

Real estate is in a real limbo right now. We keep saying that real estate values will increase dramatically and that the market is going to go crazy when interest rates go down, and most certainly when rates are in the 5% range we will see a significant increase in the number of buyers and sellers. The Federal Reserve has signaled that in September we will see a rate drop. Most mortgage lenders have already built that into their interest rates right now – meaning, we don’t expect mortgage interest rates to drop significantly and magically when the Federal Reserve finally makes a move in September.

So, why is NOW the PERFECT TIME to buy a home in San Diego?

In the last five years, I have said there were 2 absolutely perfect and ideal times to buy real estate. And because of our clients taking our advice during those periods of opportunity, we have helped them collectively make tens of millions of dollars in real estate equity growth.

Right now, we are facing a third unique buying opportunity based on all market analytics and data.

Here is when Kappel Realty Group advised our client to buy and what the results were:

1. March/April/May of 2020 - I told all of our clients (myself included) to buy real estate at the onset of the pandemic when everything was shutting down. Following the spring of 2020 in the subsequent months and years real estate realized some of the largest year over year appreciation rates. Many of our clients that followed our advice and purchased in the spring and summer of 2020 made tens of thousands, hundreds of thousands, and some even made millions by buying at the onset of COVID. To quote Warrant Buffet, “Be fearful when others are greedy. Be greedy when others are fearful”. The onset of a global pandemic rightfully so created a lot of fear in the real estate market, making it a great time to buy.
2. December 2023 – January 2024 : Late last year when interest rates were in the 7% - 8% range I told everyone to buy real estate as most buyers were fearful and focused on the payment today vs. the refinancing options in the future. Additionally, while real estate values from December to January typically go down month over month, we saw the largest Dec-Jan price increase ever in the history of San Diego last year. Because what happens December to January can be a “canary in the coalmine” indicator, we forecasted massive appreciation in 2024.  Subsequently, we advised our clients to buy as early as possible in 2024.  Those that did experienced over 10% appreciation over the following 6 months (one of the highest rates of appreciation for any 6 month period in San Diego).  
3. NOW: There are 3 indicators that tell us now is one of the best times to buy real estate. Continue reading to find out why.

Why Now Is The Perfect Time to Buy

1. Expected market time year over year – This is a measure of how many days it takes for a home to go into escrow. Homes are now taking longer to get into escrow and sell compared to any other time since 2017. Currently the average market time is over 70 days at nearly every price point. This has nearly doubled in the last year. As a buyer, this is a good sign (sellers, I advise you waiting until the spring to sell if possible or realize that you will need to be patient if you sell now). Due to longer days on market for most homes, buyers do not need to be as aggressive with their offers waiving contingencies or other buyer protections.
2. Active listings – This is a measure of the number of homes currently for sale on the market. In San Diego we are still way below the 3-year average before Covid (2017-2019) when we would usually see 5,000 – 7,000+ homes on the market at any given time. However, we are inching closer to almost 5,000 homes on the market, which will be the most homes for sale at any given time since 2019. Combining that with the longest expected market time since 2017 and we are starting to see why now is the perfect time to buy real estate – more homes on the market and longer market time. This creates the perfect opportunity for buyers to enter the market with less competition, less bidding wars, more choices, and more flexible sellers.
3. Demand – Finally, the last piece of the data needed to help us determine the best time to purchase a home – the measure of demand. This is the number of open escrows at any given time. Right now, the number of open escrows (demand) is hovering close to the lowest point it has been since 2017. That means there is very little competition for buyers. This is partially due to seasonality (home buyer demand typically goes down in the fall and winter) and this is partially due to uninformed buyers waiting on the sidelines for interest rates to go down (not realizing that by waiting they will then face more competition and higher prices). Previously, buyers faced multiple offers and bidding wars. Now, they may be the only person offering to buy a home or one of only a few people vs. dozens of other offers on that same home.

So, the trifecta is here – a longer market time before a home is selling, increased home inventory, and lower buyer demand. When we see all three of those together, we know it is the perfect time to buy.

My advice…

For home buyers, anyone who buys a property before the end of the year will be rewarded with little competition, increased inventory, and a lower purchase price relative to what homes will likely sell for next spring.

Any investor who wants to take advantage of bonus depreciation would be wise to purchase before the end of this year. Buying now allows investors to capture a 60% bonus depreciation rate before it declines to 40% in January of 2025.  

And for our sellers, we continue to advise waiting until the spring of 2025 to sell if that is an option. We are working with many sellers right now who are prepping already for the spring 2025 market knowing that they will likely have more buyers who will drive up the sales price of their home.

If you are considering buying or selling real estate in the near future, you can reach out to my team and I and we will provide you with clear and honest advice regarding what is best for YOU and your unique situation.