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Should You Buy in a Declining Market?

Los Angeles Realtor Scott Himelstein helps you learn the basics of why it makes sense to buy in a declining market. You’ll also learn about some of the key indicators that can help you predict when a market is about to turn. By understanding these concepts, you’ll be able to make more informed real estate decisions and protect your investment!

Buying in a declining market
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Why should you be buying right now in a declining market in Los Angeles? Today, I’m going to tell you why. Why does it make sense to buy a home in a declining market? My name is Scott Himelstein with the Scott Himelstein Group, and today I’m going to share with you some knowledge, some information, that you’re probably wondering, “Is this guy crazy? What in the world is he talking about?” Well, here’s what I’m talking about. That even though right now we’re still kind of in a declining market. Right now in Los Angeles, the values have declined more or less 15% plus in some markets, and I would say about 20% across Los Angeles County.

So if you’re thinking to yourself, “Well, why would I want to buy when I know that the values are going down?” Well, I’m going to be shooting straight with you today, and I don’t think we’re going to be completely done going down 100%, right now. So we’re still going to be going down just a little bit further.

Here’s why it makes more sense to buy a home in this market. Your buyer pool is not that big. Nobody else is really buying right now. So the market is declining because interest rates shot through the roof. Last year, at this time, interest rates were at 3.25%. The rates increased all the way to 7.5% last fall. Now they have dropped down closer back to 6%; but because of that, that’s caused a lot of buyers to get out of the market. And so because of that, that’s what’s caused the values to decline.

Well, here’s what I can tell you and I’ve been doing this now for almost 20 years. Interest rates are going to be coming down, and they are going to be coming down very, very quickly later this year. Now, I don’t expect them to be back in the 3’s and the 4’s. That’s not going to happen. What’s more realistic, when you talk with all of the lenders that we work with, is that they expect it to be somewhere in the mid-5’s kind of range.

All right, so let’s get into a few things. So just last week the CPI just dipped, and it just dipped to 6.5% for the month of December. They just announced that last week. So, as it’s continuing to dip month after month, after month, after month, after month, right now, that’s the kind of trend that we’re seeing right now, we expect that to keep going down.

Well, mortgage rates follow inflation. So as inflation or the CPI continues to dip, mortgage rates are going to dip also. So guess what happens when mortgage rates dip? All of those buyers that have checked out and aren’t buying homes right now, they’re going to be back in the game and it’s going be very, very competitive again when those mortgage rates come down.

So do you want to wait for mortgage rates to come down? In your head, you’re probably saying, “Yeah, you know what, I’m going to wait ’cause it’s going be a lot cheaper.” Keep in mind, when it gets a lot cheaper, the competition is going to come back. And here’s what our buyers maybe about a year ago, were looking at. You had to write an offer on a home site unseen. Half the time you wouldn’t even actually be able to go in the house. You just didn’t have time. It was a blind offer. You had to write offers substantially over the list price. You couldn’t ask for any concessions. You were lucky if you could even do a home inspection. You had to have no contingencies. So you had to have all these things that you had to kind of, pretty much waive, and just, if you wanted the house, that’s what you were going have to be willing to do. It was a pretty rough experience.

Now in today’s market, while all those buyers are on the sidelines waiting for rates to drop, you get to come in, you get to pick the home you want, the neighborhood you wanted, and to be able to negotiate with the seller and ask for concessions. And overall, it’s just a much more fun experience.

And then, here’s what’s great. The rates are going come back down. So you’re going to get in the home you want, you’re going take a higher rate right now, you’re going deal with it for a little while, the values are going decline a little bit, you’re going deal with that, but that’s okay. What’s going to happen is, as the rates are coming down, that’s when all the buyers are going to come back and the values are going to increase again. And you’re going to get refinance and you’re going to love life, because you are in the home that you want. So you’re not really going to overpay for it. You’re not going have a horrible buying experience where the seller gets to control everything that you do. You have the control right now.

This is an opportunity for you to take advantage of it while everybody else is on the sideline. This is your chance to get in the game and take advantage of it. If you want to take advantage of this market then give us a call, shoot me a text at the number (818) 396-3311. That’s (818) 396-3311. I would love to talk to you more about making this happen. I’m Scott Himelstein of the Scott Himelstein Group.

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