San Mateo County Housing Market Snapshot: A Mixed Bag of Growth and Decline
The Q3 2024 housing market in San Mateo County reveals notable shifts compared to the same quarter in 2023. While total sales volume and median sale prices increased, other key indicators suggest tightening market dynamics.
Sales Surge Amid Reduced Inventory: The number of homes sold increased by 7.7%, rising from 902 to 977, likely due to strong demand despite the dropping number of new listings. This is reflected in the lower inventory levels—the inventory of homes that haven’t sold by the end of a month.
Pricing Trends Show Hidden Results:
Median sale prices grew by 4.5%, reaching $1,908,700. At the same time, the cost per square foot climbed 5.2% to $1,149.
In Q3 2024, lot sizes shrank 24.7% (15,606 to 12,514 sq. ft.), and home sizes dropped 4.7% (to 2,012 sq. ft.). These shifts skew the reported appreciation, as smaller homes on smaller lots sold for 5.2% more. Adjusting for size differences and price per square foot ($60.00), the true median price appreciation is closer to 15.1% year-over-year.
Price Per Square Foot Climbs Nearly 9% The average price per square foot rose sharply, jumping 8.8% from $865 to $949. This uptick underscores rising property values and increased buyer competition. Higher demand, coupled with limited supply, is driving prices higher on a per-square-foot basis, a clear sign of a strengthening market. If inventory constraints remain, expect this trend to persist.
Faster Sales, Fewer Days on Market: Homes sold quicker in 2024, with the average days on market (DOM) dropping from 24 to 23 days, a minuscule 4.3% improvement. This indicates continued competition for available homes.
Strong Pricing Power: Sellers continued to receive more than asking prices, with the percentage of list price received improving to 105%, up 1%.
Total Sales Volume Climbs: The market saw a 5.9% increase in sales volume, reaching $2.35 billion, signaling robust overall growth.
Tighter Months of Inventory: The months of inventory dropped to 1.6, reflecting a 12.5% tightening, signaling a shift toward a stronger seller’s market.
In summary, Q3 2024 shows an increasingly competitive market with rising demand and constrained supply. While buyers face higher prices and smaller lots, sellers benefit from faster sales and strong pricing power. If inventory remains low, expect continued price pressures.
Drew and Christine Morgan are experienced REALTORS and NOTARY PUBLIC located in Belmont, CA, where they own and operate MORGANHOMES, Inc. 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 the top 3 in Northern California by RE/MAX. To contact them, please call (650) 508.1441 or email info@morganhomes.com.
For all you need to know about Belmont, subscribe to this blog right here. You can also follow us onFacebook and onTwitter.
This article provides educational information and is intended for informational purposes only. It should not be considered 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.
Back in November 2022, we wrote an article titled “The Big Risk in Gambling on Bay Area Home Values” where we predicted that this day would come. We expected that Q1 in 2023 would see a significant decrease when compared to 2022 but are we comparing apples to apples? We suspect that by Fall, the year-over-year changes will be more accurate since the first three months of 2022 were an anomaly due to a surge in home prices (not values).
Last year in April, the Bay Area housing market reached its highest point, driven by the fear of impending interest rate hikes. However, since May 2022, there has been a decline in the market. The decline can be attributed to the interest rate increases, which ironically is what led to an increase in housing values in the first quarter of 2021.
This unsustainable and rather sudden ramp-up in bidding wars, and consequently home values, ended rather abruptly in mid-April.
Currently, in San Mateo County, home values have reverted to levels seen in August of 2022.
Comparing the months of April YOY for San Mateo County, the dramatic shift is seen across the board in almost every category.
Fewer sellers are willing to sell in today’s market because as most have locked into fixed-rate loans in the 3% (or even less) range.
With fewer sellers willing to move, the number of new listings is down 38%. In any other market, this alone would create a shortage of inventory of homes for sale which in turn would drive up prices. However, the higher interest rates that are keeping sellers in their homes longer, are also eroding the purchasing power of buyers. This is helping to keep our market near equilibrium—a state which historically is rarely seen, and if so, never for very long.
We notice a similar trend in the city of Belmont, but it’s more pronounced because the sample size is small, which makes fluctuations more noticeable.
Opposite the Law of Large Numbers, a foundational concept in statistics that if a sample is large enough, the sample average should be close to the mean, the law of small numbers provides us with a “Belief in the Law of Small Numbers.” In their paper, Kahneman and Tversky—who famously explored human heuristics, define the Law of Small Numbers as the mistaken belief that a small sample accurately reflects the probabilities of a population. In small data sets, you can find patterns where none exist!
Such is often true when isolating the numbers for home sales in Belmont.
Here we note the magnified effect of the market as compared to San Mateo County as a whole.
That said, there’s no doubt about the YOY change. In 2023 the size homes that sold were 22.5% larger, yet sold for 7.7% less, indicating the true YOY value shift to be close to a 30% drop.
The average time it takes to sell a house has increased by 200%, which shows that buyers are becoming pickier. However, it’s also happening because many sellers are still setting their prices based on past market conditions and pricing their homes too high.
It’s unfortunate that some agents prioritize making a sale over being honest with the sellers. They may tell the sellers what they want to hear, instead of what they need to know. Additionally, sellers often choose agents based solely on the price estimate the agent gives them for their home, which perpetuates this behavior.
At present, the inventory of homes available for sale is only enough to last for about a month. This is a notable decrease from the 9.5 months of inventory during the 2008 economic crisis.
As we move past April, the monthly figures will gradually approach and eventually exceed the year-over-year numbers of 2023. However, we do not anticipate this to occur until the year 2024.
It is imperative that you price your home correctly if you are considering selling it. This holds especially true in the current market. Do not hesitate to contact us for an honest evaluation.
Drew and Christine Morgan are experienced REALTORS and NOTARY PUBLIC located in Belmont, CA. They have been assisting 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.
or all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook and on Twitter.
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.
It seems like forever since the housing market has been in balance. The downturn in 2007-2009 was followed in 2012 by an 11-year run up in Bay Area home values. Are we finally reaching equilibrium?
The first quarter of 2023 is in the books, and the housing numbers are in. If you’ve been listening to local news, one might believe the housing market is on a slippery slope and headed towards a trough.
The numbers sure make it look that way too, but is there more to report? The short answer is, there always is.
Looking at San Mateo County as a whole, here are the YOY (Year over Year) numbers comparing 2022 to 2023:
In every category the numbers appear to indicate that we’re in a declining or buyer’s market, but we’re not. Why?
Half of the homes are still selling for over asking, while the other half are selling for less, which is strongly indicative of a market in balance. Take a look at these graphs we prepare–they show the market is beginning to level out.
NEW LISTINGS
This number is down because sellers with 3% interest rates are reticent to sell their current home only to find their new mortgage on a replacement property closer to 6%. This decline was amplified by the historically inclement weather.
INVENTORY
This is a measurement of how many homes remained for sale at the end of the measured period. This is showing us there were fewer homes left over at the end of the quarter, which didn’t sell.
SOLD HOMES
The number of sold homes is actually very close to the number of fewer homes that were listed for sale. It’s like a car lot—if they have fewer cars on their lot to sell, they’ll sell fewer cars. In 2023, note that there were ~36% fewer homes available for sale, but only 31% fewer sales, which is consistent with the inventory of remaining homes being lower in 2023.
AVERAGE DOM
Homes are taking longer to sell. While there are fewer homes to choose from, there are also fewer buyers that are willing to purchase a home—creating for the first time in a long time, a balance in supply and demand.
A side note on why homes are taking longer to sell is twofold—sellers who are in denial that they missed the peak price point from 2022, and agents who have never worked in a more regular market, and will take any listing at any price also in denial that the market has changed.
The days of an on average six-day period of marketing are gone for the foreseeable future. In fact, six days on the market was also an anomaly. Last year at this time six days was all that was needed to sell a home with the incredible amount of urgency to beat rate hikes. In 2021 for example, the days on market during this period was 25. This year it’s at 32—higher, but again not astoundingly.
MEDIAN SALE PRICE
The median sale price is for the entire county, so what may be happening in your city or even neighborhood is probably different.
The YOY drop of 11.8% from 2022 and the Price per Square Foot drop of 11.4% are fairly close to each other indicting that this can be considered to be a reliable measurement of the drop in home values between these two periods. If these two categories were off by a substantial amount, it would indicate a shift to smaller or larger homes selling in the two periods. We frequently run into this type of shift when measuring small market samples in smaller cities and when looking at only one month of sales for example.
THE INSIDE SCOOP
Here’s where it gets interesting. While the media may be accurately reporting these numbers, they do not put them into perspective, which in some cases such as this, a whole new story emerges.
In fact, the median homes prices are lower, and they should be, because they are being compared to Q1 in 2022 which saw the fastest run up in home values in the history of the Bay Area (see next paragraph for a deeper dive). We did an article on why this happened last year and predicted that this year would pale in comparison and exacerbate the apparent decline in values—which is exactly what happened.
We also went on to forecast that once we get past the May numbers in 2022—when the April sales of 2022 peaked and were reported—we may see an actual YOY increase in 2023 over 2022 as the summer and fall approaches, as that’s when in 2022 home prices began to decline.
LIST PRICE TO SALE PRICE RATIO—Making Sense of it All
The decrease in multiple offers has clearly has an impact on homes selling for over their asking price, as seen in recent, previous years.
While homes sold on average for 114% of asking in Q1 of 2022—that wasn’t normal—it was an anomaly.
It was due to the sudden demand in housing in 2022 fueled by the fear of looming interest rate hikes. Looking at the same period in 2022—January through April—homes sold for on average 106% of asking in 2021. In 2023 the percentage over asking was 101%—so eliminating the frenzied run up in 2022, the percent over asking is still lower than average, but by only 5 points instead of 11.
MONTHS OF INVENTORY—What does that mean?
The Months of Inventory statistic shows us, at the current rate of homes sales, how long it would take to sell the current inventory of homes.
A normal Months of Inventory, if we average San Mateo County’s inventory levels dating back to 1998, is 2.6 months. Nationwide wide they hover around six months of inventory.
During the financial crises of 2007-2009—from peak to trough the inventory levels of homes for sale in San Mateo County stood at 5.2 months.
In Q1 of 2022 they were only 1.3=2 months of inventory and that has bumped up to 1.7—still far below historical averages.
Locally, the story is much the same in our two of Belmont, but, since the sample size is so much smaller, the swings in statistical categories can appear skewed, and over or underrepresent the overall housing pattern in the Bay Area.
The Take-Away
In San Mateo County, the housing market has slowed from its Q1 2022 peak.
If the economy stays the way it is now, in Q2 the YOY numbers will be more similar.
We imagine that in Q3 the median home value may be similar to 2002.
The historical inclement weather has kept a lid on new listings—we expect this to increase as weather improves. More homes for sale will keep a ceiling on home appreciation as the market shift deeper into buyer territory.
The stats show the market shift in the buyer’s favor has created a more balanced housing market.
There is no metric that compares to the financial crisis housing depreciation in 2007-2009
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.
For all you need to know about Belmont, subscribe to this blog right here. You can also follow us onFacebookand onTwitter.
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.
Last year was a wild one, but not entirely unpredictable, as we forecast in December of 2021.
Like our recent unprecedented storms, the factors that led to the abrupt housing market shift in the second quarter of 2022, created the perfect storm for a change in the market—not a correction—a change or shift.
In Perspective
After the pandemic stay-at-home order created a need for more space to work from home with many home-schooling children, the new skyrocketing demand for single family homes caused prices to follow suit.
In the first quarter in 2022, we saw an unprecedented run up in home values in our area. Never in our history had home values risen so fast in such a short period of time.
This was to some degree anticipated, as it was widely announced that interest rates would be rising in the upcoming year—this on the heels of desperate attempts to secure a home in 2021 made for bidding wars outpacing sustainability.
In April of 2022, with mortgage interest rates rising to levels not seen since the same time in 2009 during the Great Recession, a pullback began as affordability suffered.
April sales logged the highest prices ever in our area’s history. These sales closed in May, making April technically the pinnacle of home values.
Then it began to slip.
Prices dropped each month-over-month, but-remained higher than a year earlier. In other words, the Year-Over-Year numbers until October remained higher than the previous year.
This is the YOY comparison for December of 2021 to 2022. In every category the housing numbers are unveiling a softening in the housing sector—prices are down, days on market are up, etc.
Note that the size homes selling in these two periods exaggerates the actual drop in values, while antithetically, the price per square foot underrepresents that delta.
We can make a rough “back of the napkin” adjustment, accounting for smaller homes selling in the two periods and skewing the median home price. Note that the median home price dropped 32% but so did the size homes which sold. Adjusting for this, the actual median home price is likely flat YOY, insofar as the median price anyway.
As one can see by this graph, unemployment in San Mateo County is at or near an all-time low:
Yet Tech specific lay-offs, effect our local housing disproportionally than elsewhere, as many local tech jobs are located on the Peninsula. When workers in the tech industry see companies laying workers off they tend to go into hibernation, avoiding any large purchases that require a long-term commitment.
Many of these same companies offer sizable salary offsetting stock inducements. When there’s a hit to their portfolio, tech buyers will tend to wait it out for more favorable withdrawal conditions. And those who bite the bullet and cash out, lose buying power when their portfolio is down.
While interest rate hikes shocked the system of buyers to their core, the initial wave began in January of 2022, enticing a lot of buyers who could see the writing on the wall to jump into the market to secure a low mortgage rate, even if doing so meant overpaying for a home.
Later, the rising rates had a real effect on housing, as we entered a return to normalcy—wiping out the entire first quarter of home value increases in a matter of months.
Some buyers are holding onto the notion higher interest rates will continue to put downward pressure on home values, while sellers, still stuck in the first stage of grief—denial—are holding out for a return to the glory days of early 2022.
Who will blink first? It’s anyone’s guess. But the overall healthy economic conditions, despite the aforementioned variables, may lean in the favor of buyers returning to the market as soon as they feel confident and comfortable in the economic environment.
MOVING FORWARD
In an effort to thwart a complete housing melt down in 2007, the government bought bonds to drive down interest rates and the FED overnight rate was held at zero.
Buyers will no doubt soon begin to realize that they are not going to see artificially induced low mortgage rates again anytime in the foreseeable future—if ever, and will begin to accept the new reality.
Sellers will stop bemoaning missing the height of last year’s market, and eventually decide to move ahead with life’s plans.
Past performance doesn’t guarantee future results, but we can see patterns that emerge. We wouldn’t be surprised to see home values remain more-or-less flat for the year in 2023, and overall sales remain down.
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.
For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook and on Twitter.
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.
Bay Area real estate has always been buoyed by strong consumer sentiment that the inflated prices will remain a good investment. But once there’s a chink in the armor, all bets are off.
First there was the real impact of rising interest rates, that began the first of the year in 2022 and have continued to date.
Freddie Mac, 30-Year Fixed Rate Mortgage Average in the United States [MORTGAGE30US], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MORTGAGE30US, November 9, 2022.
That coincided with the stock market downturn which affected the down payment resources of many potential buyers.
S&P Dow Jones Indices LLC, S&P 500 [SP500], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/SP500, November 9, 2022.
Inflation per se, is actually a good hedge against inflation, but inflation scares people and people who are unsure of the future tend to hunker down.
These events affected the Bay Area housing sector in the following ways:
On a macro scale, the Case-Shiller[1] report for the nine Bay Area counties, also known as the San Francisco Metropolitan Area—SFMSA, reported a steady YOY decline in home values after the peak in May—beginning in June of 2022.
S&P Dow Jones Indices LLC, S&P/Case-Shiller CA-San Francisco Home Price Index [SFXRSA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/SFXRSA, November 9, 2022.
Notice the skyrocketing home prices in the first quarter of 2021—up almost 25% YOY.
The markets technically peaked in April, and the May closings with the typical 30 day close of escrow figures support that.
Since then, we can see home values, while still higher than they were a year ago at the same time, are quickly back peddling—only 5% higher than a year ago—down from 24% higher in March 2022.
COMPARE AND CONTRASTING DOWNTURNS
Looking at the high in March of 2006, we saw closings strong, with 21 sales, only one price reduction, and sellers netting 103% of their asking prices.
Fast forward to October in 2006, and what sellers received of their asking price dropped to 102%, sales remained the same at 21, but four homes needed price reductions.
In March of 2022, there were zero price reductions, 31 sales, and homes sold for 113% of asking with no price reductions.
In October of 2022, only seven homes sold for 102% of asking with one home needing a price reduction.
As of this article printing, there are still 21 homes available to choose from, four with price reductions and the average days on market at 40.
THE TAKEAWAY
The future of Bay Area real estate is murky at best. Real estate is highly speculative, and there are many talking heads ready to proffer their opinion of what will come next. The media plays a large roll in affecting the mindset of unsure buyers. The media’s angle is to get a reader or viewer’s attention since more eyeballs equals sponsorship and income for their business, so they tend to be overly dramatic in their headlines and analysis and look for ways to support their sometimes sensational, preconceived views rather than report the facts without spin.
We’re in the trenches and we’ll be the first to tell you there’s no way for us to predict what the market will look like next month let alone in 2023. The future of real estate is always in the buyer’s hands. Until they feel comfortable their jobs are secure, that they can afford the home and cash out needed funds from their stock portfolios, that the market won’t collapse out from under them, they’ll stand down and wait it out.
Market swings in the Bay Area are more akin to a light switch, than a dimmer. Ironically, once the above negative obstacles are overcome, it will hold true for many buyers at the same time and the proverbial light will come on as buyers jump back into the market all at once, and multiple offers will raise their ugly head again.
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.
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.
Now that the third quarter of 2022 is in the books, we take a look at how our current market stacks up to historical markets when interest rates were as high (or higher) than they are today, and how these rates have impacted not the price of homes, (we did that in another post), but rather the quantity of available homes for sale and how many are actually selling—as well as how long that process takes.
First, we examined the 3rd quarter of 2016 when interest rates were at a low of 3.42. We the contrasted that to 2022 for the same periods.
Rate during these periods averaged were as follows:
Interest rates between 2016 and 2022 went up in real numbers 3.28%—a 96% increase over 2016.
Here’s how that affected sales:
In San Mateo County the number of new listings dropped 7.8%.
Fewer new listings had an impact on inventory of homes available. That dropped by 11.6%. Inventory is measured as how many homes are remain on the market on the last day of the period measured—in this case September 30TH.
Sales in 2022 dropped faster than the number of new listings in 2016—9.5%
What a seller could expect to receive of their asking price averaged 105% in 2016 and 102% in 2022.
If we look at the last time interest rates were as high as today’s (av. 6.98)—in 2001—the time it took to sell a home stood at 53 days and sellers were receiving on average 95% of their asking price. We attribute the greater change between 2001 to 2022 to in Q3 because in 2001 we were in the post internet bubble burst throes of a recession.
One would expect with the higher interest rates we have seen in 2022, they would have a greater impact on sales than is demonstrated here. Our take is that the remaining post pandemic pent-up needs has had a hangover effect on the robust home sale activity in 2020-2021.
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 are 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.
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.
Following our local real estate market is a lot more interesting when it’s in a state of flux. Coming out of the Great Recession in 2012, when home selling activity began to pick up dramatically after a five-year hiatus, we finally had some interesting news to report.
Since then the meteoric rise in home values and bidding wars have been the story for the past 10 years, with only minor seasonal fluctuations.
But in April of 2022 that all changed. With a recession looming, and stock portfolios dropping as fast as interest rates are rising, there’s been a sizable shift in real estate activity.
But exactly how have these forces altered the home selling landscape?
The answer is it depends on who you ask. For buyers they are in the arms of a welcome change in the level of competition, but the throes of an unwanted increase in their mortgage payments.
Many sellers on the other hand are suffering from the seven stages of grief, but can’t seem to get past the first stage—denial. No one wants to admit they may have timed the market wrong and missed the home selling peak, instead they’re hanging onto rosier days—ignoring the changing landscape around them. This manifests itself in sellers hiring agents who will tell them their home is worth a price that it used to be, in order to secure a listing, only to have their home languish on the market for months and suffer multiple price reductions to no avail.
To help put the market shift into perspective, in 2021 only two homes were pulled off the market between May and October 1st. During the same period this year, that number rose to 13—a 550% increase in homes which did not sell.
In a recent blog we discussed how buyers who are clinging to the notion that higher interest rates will bring down home values further, could well be making a dangerous miscalculation. The smart move is to jump in with the low competition and purchase a home before rates rise further. As we mentioned in this post, the decrease in home values cannot begin to help buyers when interest rates are rising at a faster pace.
Looking at homes sales for August 2021 as compared to august this year, the forces that have changed the market have had less of an impact than would be expected.
Simply looking at the median home price for all of San Mateo County—and even drilling down to the local level in Belmont—the lack of change seems at odds with what is occurring. This can likely be explained that homes which are priced well are still receiving the attention they deserve.
Note though that the median price per square foot dropped in both markets, while the size of homes selling rose—meaning that in 2022 you can get a home 8% larger in San Mateo County for the same price as one paid a year ago, and 17% larger in Belmont for essentially the same price.
… Homeowners who refinanced or buyers who purchased a home when rates were at historic lows—in the 2-3% range, aren’t going to be selling their home and moving anytime soon. Sure, in California they can now carry their low property tax base, but they can’t carry their low interest rate—so many are going to stay put and there will be even less inventory than there has been, and which will once again put upward pressure on housing prices”.
Also, worth taking note of is that while the level of new listings has dropped considerably, the months of inventory—the amount of time it would take to sell the current inventory of homes at the current pace of sales—has also risen.
A real standout in the statistics, that may tell us more than any other single stat, is the percent a seller received of their asking price—down 8% in San Mateo County and 14% in Belmont YOY—indicating that there is far less competition for the fewer number of listings.
For sellers, which way should you turn? Find an agent experienced in uncertain markets will keep you from the dreaded downward spiral of price reductions and delays on the market. Our best advice is don’t be another statistic, get out ahead of the pack and price your home reasonably and in accordance with the actual current market conditions—not what you want them to be.
Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are 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.
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.
How to put historical interest rates vs home values into perspective.
It’s hard to predict where internet rates will take home values, but as history has shown, it can be a Fool’s Game to try and play the market. Akin to the depiction in this post, the consequences can be painful.
Take for example Interest rates in August of 1993—they stood at 6.97%. By November of 1994—just 15 months later they were up 2.28% ↑ to 9.25%. How did home prices react to the sharp increase in interest rates? The went up .52% points during the same period—no dramatic dip that made it worthwhile to try and wait out the effects of higher rates.
Here’s a real-world example. Let’s say one bought a $2,000,000 home today with a 4.5% interest rate. A monthly interest payment would be ~$1,000 less each month than if the rates go up to 5.5%. Here’s an on-line calculator to run scenarios.
What does $1,000 a month translate into purchasing power? In the above example, $200,000. Which means that if the rates go up to 5.5%, home values would have to drop in step with that increase 10% for one to just breakeven vs buying now at 4.5%. Why wait for a higher 5.5% rate to put downward pressure on home prices—which as history as shown, there’s no guarantee will happen.
In our observations, being in the sector of tech heavily weighted jobs, wherein many are reliant on stock options for their downpayment, any hit to the financial markets makes it unlikely that buyers will liquidate stocks to buy a home. In our world, that and job security (e.g. Consumer Confidence—which is up recently), has a greater impact on buying activity than interest rates.
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 are 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.
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.
