It is becoming more and more common for Nevada County homeowners to change their minds from selling to renting. In the past few months I’ve received a handful of new clients who unexpectedly had to move out of town for work, and after trying to sell their home for many months, turned to renting instead.
Why is this the new trend? What does it say about the Nevada County real estate market? According to Mark Weyman’s Average Property Sales Prices graph below, 2014 average property sales prices are comparable to 2009 prices. Although the prices have been steadily increasing since 2011, I believe that buyer’s are still weary of the market.
I spoke with a lady the other day that was viewing one of our rentals. She told me that even though she was qualified to purchase a home now, she was waiting because she felt that there would be another wave of short sales and foreclosures coming from people that tried to hold on in the downturn.
Although there is no way to predict what will happen in the future, we can draw conclusions from the history. According to the graph above, the last time we saw a downturn in the market right after growth was between 1991 and 1992 and then again from 1994 to 1995. Since 1996, the Nevada County real estate market has shown normal cyclical changes. What does this say regarding our current market? If there is a downturn in the near future, it will be small and we will recover quickly.
One other thing to keep in mind when considering the switch from selling to renting is the cash flow of your property. If it does not make sense financially to rent your home because your expenses are too high, then selling may be your only option. You can use our Cash Flow Worksheet to determine if renting makes sense.
