Get ready to be captivated by the unveiling of the New, New housing market – a realm that has never been encountered.
Whether you’re already a homeowner or dreaming of becoming one, this end-of-year recap is your golden ticket to exploring the mesmerizing future of Peninsula Real Estate.
Brace yourself for a paradigm shift that might just redefine the real estate game for years to come.
In order to put our New, New market into perspective, a little retrospection is in order. We’re about to unravel the mystery into the feverish ride of the government’s bond-buying bonanza that kicked off in 2008, akin to a superhero swooping in to rescue the struggling housing market and economy from their doldrums but with consequences more obscured by time…
Imagine people in 2013 dancing a jig as they refinance their homes at historically low mortgage rates, hitting new lows every year. Homeowners, practically giddy, were high-fiving each other at snagging a sub 3% rate, watching their mortgage payments take a nosedive, and then going on a shopping spree for new toys like they just won the lottery.
Ah, the ironic nostalgia hits like a blast from the 1998 dot-com past. It’s like reminiscing about the Internet boom and bust, where Silicon Valley was popping champagne bottles, celebrating a new millionaire being minted every day. It was all glitz and glamour until someone finally shouted, “Hold up, is there even a ‘there’ there?
Now, we’re not claiming to be fortune-tellers, but more than a decade ago, we threw out a warning in this article. We were like, “Hey, if these rates stay low forever, everyone and their grandma will refinance or buy a home at these crazy low rates, and they might never want to move again!” It turns out we might have been onto something.
We did a fast rewind of how our housing market got here in this post back in August of 2023. Fast forward to where we are today…
The 2023 housing market results are now clear. Let’s compare the years and quarters to understand what happened:
San Mateo County (SMC) Overview:
Comparing 2019 to 2023:
- Home sales went down by 17%.
- New listing inventory decreased by 16%.
- Days on the Market decreased by 11% to 25 days.
- The Median home price went up by 16%.
- Sellers received slightly less of the asking price, down 1% to 103% of asking.
Comparing 2022 to 2023:1
- Home sales decreased by 17%.
- New listing inventory dropped by 20%.
- Days on the Market increased by 25% to 25 days.
- The Median home price went down by 5.5%.
- Sellers received less of the asking price, down 3.7% to 103% of asking.
1The decline in 2023 is emphasized by the unusual increase in home activity during the first quarter of 2022. The market in San Mateo County remained rather flat from Q4 2022 to Q4 2023.
Comparing Q4 2022 to Q4 2023:
- Home sales were down by 6%.
- New listing inventory increased by 9%.
- Days on the Market increased by 15% to 30 days.
- Median home prices remained unchanged year over year.
- Sellers received less of the asking price, down 3.9% to 99% of asking.
For Belmont:
Comparing 2019 to 2023:
- Home sales went down by 23%.
- New listing inventory decreased by 24%.
- Days on the Market decreased by 9% to 20 days.
- The Median home price went up by 25%.
- Sellers received the same percentage of the asking price.
Comparing 2022 to 2023:
- Home sales decreased by 13%.
- New listing inventory dropped by 22%.
- Days on the Market increased by 33% to 20 days.
- The Median home price went down by 10%.
- Sellers received less of the asking price, down 7% to 104% of asking.
Comparing Q4 2022 to Q4 2023:
- Home sales went up by 9%.
- New listing inventory decreased by 4%.2
- Days on the Market decreased by 24% to 22 days.
- Median home price increased by 2%.2
- Sellers received more of the asking price, up 5% to 105% of asking.
2What is helping to keep home values steady is the short supply of homes for sale, maintaining the months of housing inventory to approximately a one-month supply.
As We See It
When the government bought bonds to drive down interest rates in 2008, it was a welcome jolt to jump-start a beleaguered housing market and economy.
People could refinance to historically low mortgage rates, which seemed to reach a new low each year. Homeowners were giddy at landing a sub 3% rate, watching their mortgage payments fall by half, and snapping up new toys with their excess pocket money like drunken sailors.
Not that we’re not claiming to be prophets. Still, we were first concerned about this more than ten years ago, correctly calculating that if these low rates remained low long enough, nearly everyone would have refinanced or purchased a home with a historically low rate, which, in all likelihood, would not be seen again in our lifetime.
It didn’t take much prognosticating in our 2013 article to realize that sellers would be reticent to kiss goodbye at their sub 3% rate to get another bedroom when rates returned to historical norms.
The New, New Market
Enter the Pillars of Movement – the mystical forces that shape the real estate universe. In our 2013 article, we saw it coming: When interest rates decide to do a head-snapping reversion to historical norms, sellers won’t be willing to bid adieu to their sub 3% rate just for an extra bedroom. And guess what’s next – the pool of potential inventory shrinks, thanks to one pillar of the housing inventory.
Yet another pillar emerges – one insulated from rate ramifications—the sellers cashing out and saying so long to the Bay Area with pockets full of cash, ready to conquer the world and buy their forever home mortgage-free.
And sure, there’s always the ebb and flow of people coming and going due to job transfers, but only some people leaving want to throw in the housing towel. Because let’s face it, once you’ve left the Bay Area, rejoining the housing game is like trying to win the lottery twice – expensive and seemingly impossible.
Now, behold the last pillar – the legacy homes. Those sacred abodes where families were raised, but now, faced with the ultimate decision for sustainability or the inevitable march of time, these homes hit the market.
As we peer into the future of 2024, a foreseen vision emerges:
- Anticipate the descent of mortgage interest rates in Q2, beckoning buyers back into the market.
- This shift is poised to elevate home values, with a forecast of modest increases in housing prices.
- In this unfolding scenario, both buyers and sellers are likely to acclimate to market interest rates, proceeding with life’s plans.
- While inventory is projected to see a slight uptick, it is not expected to significantly diminish home values or disrupt the delicate interplay of low supply and high demand.
Drew and Christine Morgan are experienced REALTORS and NOTARY PUBLIC in Belmont, CA. They have assisted buyers and sellers in their community for over 30 years. Drew and Christine have received the coveted Diamond award and ranked among the top 50 agents nationwide and top 3 in Northern California by RE/MAX. To contact them, please call (650) 508.1441 or email info@morganhomes.com.
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This article provides educational information and is intended for informational purposes only. It should not be considered as real estate, tax, insurance, or legal advice, and it cannot replace advice tailored to your specific situation. It’s always best to seek guidance from a professional who is familiar with your scenario.
BROKER | MANAGER | NOTARY
