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.
WHERE ARE WE NOW
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
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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.