Given the substantial wealth associated with owning property in the Bay Area, it’s rational for sellers to strive for enhanced investment gains and carefully assess the most opportune moment to sell their residences. However, the challenge lies in the limited data available to assist them in reaching a well-founded decision.
Our objective is to adopt a forward-looking futurist strategy to aid individuals in making well-informed decisions while avoiding any reliance on methods like fortune-telling cards or crystal balls, or theories that stand to benefit us personally.
The stability of our real estate values has been influenced by Sellers’ reduced desire to sell their homes, a direct consequence of rising interest rates. This has maintained a state of relative equilibrium in the market compared to recent times.
However, the situation might shift in 2024. More Sellers have postponed selling their properties this year, hoping for a more favorable market next year. This presents a potential issue.
Historical market downturns, like the one in 2007, have seen buyers holding off on purchases for years. When they eventually rejoin the market, they tend to do so simultaneously due to changing conditions that they have in common, resulting in multiple offers and price escalation—a phenomenon observed in 2012 following a housing hiatus.
Sellers could also face this challenge. Previously, when government bond purchases kept interest rates artificially low, and people refinanced at around 3%, the anticipation was that rates would rise when the bond purchases ceased. As predicted, Sellers have now refrained from refinancing and moving due to the prospect of significantly increased mortgage payments.
Given that interest rates have doubled in the past two years, Sellers lack motivation to upsize their homes, considering their mortgage payments would more than double. Property tax hikes further compound this issue. Many Sellers we’ve communicated with plan to wait until 2024 before acting.
In this scenario, if more homes come onto the market while the buyer pool remains static, it could lead to lower home prices in 2024 due to reduced competition for available homes.
Another challenge in 2024 is the presidential election year, which is historically associated with market pullbacks due to political and economic uncertainties. These uncertainties breed caution and indecision among buyers, particularly from May to November, resulting in further downward pressure on prices.
This graph illustrates the effect the highly contentious election between Hillary Clinton and Donald Trump in 2016 had on home values during those months.
Drawing from historical market trends, we recommend Sellers take proactive measures to address the potential influx of 2023’s home Sellers. Selling before May 2024 becomes crucial for maximizing returns ahead of the election year’s uncertain market conditions.
Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA with more than 30 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California. They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.
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The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.
Drew Morgan, Broker Associate 01124318 | Christine Morgan, Sales Associate—Owners of MorganHomes, Inc. Licensed under RE/MAX Star Properties, 01811140
