Similar to the scene where the first person to swerve away is labeled the “chicken” and loses, in real estate negotiations, the party who concedes first may feel they’ve lost ground or compromised their position.
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Despite homes being above water and values steadily increasing on the Peninsula, the overall market is not in top shape, as the number of transactions is at an all-time low.
Overview:
Recent Data (Q3 2023):
Sales Trends:
Home Prices:
Local Impact in Belmont:
In essence, while home prices are rising due to limited supply, the number of available homes for sale and overall transactions has significantly declined, especially when compared to previous years.
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.
BROKER | MANAGER | NOTARY
It’s almost unbelievable to think of any sector in the Bay Area facing an 18% income drop, but when you couple that with a 25% decline in available homes to sell, it paints a picture that’s not just about numbers—it’s a story.
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Our market peaked in May of 2022, began a slow slide until it hit bottom of that year in November, before regaining its traction and the slow pace of recovery.
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It’s just like hopping on a roller-coaster, but with a twist of real estate drama!
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We recently published an article titled “Navigating Bay Area Real Estate: Balancing Wealth Optimization and Limited Data Amidst Shifting Market Dynamics” that sparked significant reader inquiries seeking clarity. Within this piece, we delved into the year-over-year assessment of home values for June, a customary method to analyze housing trends.
However, exploring micro trends can prove beneficial during market volatility. This involves observing month-to-month changes. The challenge in doing so is the presence of seasonal fluctuations in the real estate market. The trends we compiled for San Mateo County and our residing city, Belmont, illustrate a gradual price recovery compared to the preceding article, where annual values had receded in quarters Q2-Q4 of 2022.
Though yet to reach the peak levels of 2022, at least for now, home values appear to have stabilized and are maintaining, if not gently appreciating.
We exemplify this by presenting an illustrative graph generated by Fred®, utilizing the Case-Shiller® data methodology linked here. While this data trails the market by three months, it remains valuable for investors analyzing value patterns. The most recent trend depicted suggests we may have surpassed the market trough and are trending upwards.
Opting for gradual growth is preferable due to its sustainability. The graph we provided indicates growth is so gradual that any economic shift could easily reverse the trajectory.
The market correction following the hyper-growth observed in Q1 of 2002—driven by imminent interest rate hikes—seems to have subsided. The question now is the duration it will take for buyers and sellers to adjust and realize that the era of sub-3% loans is unlikely to return, prompting them to proceed with their life plans.
Sales in the Bay Area have declined by 30%, a result of a similar 30% drop in available new listings.
Presently, prevailing market dynamics impact our housing sector, with both sellers and buyers hesitating due to current interest rates, despite their historical below-average nature.
A further incongruous position we have today is the dichotomy between sellers awaiting price rebounds and buyers finding that prices are already too steep.
According to a recent survey by Fannie Mae, the nation’s primary purchaser of secondary market loans, 82% of buyers believe it’s an inopportune time to purchase a home.
The query remains: When will one of these groups move into action?
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.
Drew Morgan—Broker Associate 01124318 | Christine Morgan—Salesperson 01174047
Co-Owners of Morganhomes, Inc. Licensed under RE/MAX Star Properties 01811140
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.
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.
Drew Morgan, Broker Associate 01124318 | Christine Morgan, Sales Associate—Owners of MorganHomes, Inc. Licensed under RE/MAX Star Properties, 01811140
Though the landscape may appear bleak to some, to others, doors have opened to greener pastures offering new market opportunities.
We guessed correctly that around this time, home prices would start to look more like they did a year ago than two years ago.
Looking in the rear-view mirror, home prices hit their all-time high in April of 2022 before beginning what would be a reverse of fortune for sellers over the next year.
Most indicators remain down over last year, but not so much in the price decrease department. What has taken a hit is the inevitable drop in sellers choosing to move for fear of losing their low fixed mortgage rate.
Take Belmont, for example. The number of new listings dropped 27% YOY as compared to June 2022.
The Inventory—or the number of homes left for sale at the end of the month dropped 56%, a strong indicator that there is still strong demand for homes.
One more home sold this month than last year, which is statistically insignificant, but it underscores that our meager inventory is moving.
The days a home is on the market is back to a more normal 12, up from eight when the bidding frenzy in Q1 of 2022 was at its peak.
The percent a seller receives of the asking price is around 105%—down from 107% a year ago, but still indicating overbidding on select homes.
The Belmont median home price is down 12.3% YOY, as some air escapes from the brief bubble in 2022.
San Mateo County fared about the same:
News listings declined 27%
Inventory dropped 30%
Sales were down 8%
The median home price came down 5%
And the time it took to sell a home increased by 50%
We still have less than one month of housing inventory in Belmont and 1.4 months in San Mateo County, which is lower than the rest of the country by about five months.
Currently, half of the homes being sold are fetching prices above the seller’s asking price, indicating the presence of multiple bids, while the other half are selling for less. Sellers are still receiving lower prices than they could have obtained a year ago during the brief bubble. However, given the rapid 14% price increase in the first three months of 2022, it is evident that there was considerable room for a market correction.
With prices rising by 14% in the first quarter of 2022, it was anticipated that a portion of the price surge would not be sustainable.
TAKE AWAY
Interest rates have increased again recently and will probably stay at these levels for the remainder of the year. That’s not helping buyers or sellers. Buyers can afford less home, or less expensive homes, and sellers don’t want to move, which puts more pressure on holding home prices at bay.
Since the local housing market heavily relies on the interplay of supply and demand, if interest rates remain high and an increase number of sellers feel compelled to sell, the growing inventory of homes for sale will intensify the pace of home price decreases.
We understand how difficult it is to try and time one’s life around the housing market—whether to move now or later and what would be optimal. Two things will impact the housing next year that we can anticipate. With the Presidential Election, we expect a repeat of diminished housing market activity as we near summer. And mortgage interest rates are expected to come down. This may entice more sellers into the market, diluting the pool of possible buyers for homes. If you are considering a move, be sure to contact us soon so that we may advise you early on as to the best time next year to sell.
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.
Drew Morgan, Broker Associate 01124318 | Christine Morgan, Sales Associate 01174047
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.
