Unveiling Housing Trends: The New, New Market—Understanding San Mateo County and Belmont Markets – and a 2023 Wrap Up…

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.

Pillars of Movement

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.

For 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

San Mateo County Rising Home Prices, Plummeting Transactions, and the Impact on Belmont

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:

  • Home values are consistently rising on the Peninsula.
    • However, the number of home transactions is currently at an all-time low.

Recent Data (Q3 2023):

  • In San Mateo County, new listings are down 6.7% compared to a year ago.
    • Compared to a more typical year, 2018, new listings are down significantly by 18.3%.
    • When compared to the Great Recession in 2008, new listings have plummeted by almost 60%.

Sales Trends:

  • Sales have decreased by 15% from last year, 20% from 2018, and 26% from 2008.

Home Prices:

  • Despite (or because of) the decrease in available homes, home prices are rising.
    • Following the basic economic principle of supply and demand, the limited supply is driving up prices.
    • In San Mateo County, home values have increased by 1% since last year, 13% since 2018, and an impressive 46% since 2008.

Local Impact in Belmont:

  • In Belmont, the impact of higher interest rates is more pronounced.
    • New listings are down by 4.5% from last year’s Q3, but significantly lower by 70% since 2018 and 80% since 2008.

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

From Snail’s Pace to Silver Linings: Unwrapping the Real Estate Tale of 2023

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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Unveiling the Thrilling Odyssey of Bay Area Housing Values: A Tale of Peaks, Plummets, and Uncertain Horizons

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.

Continue reading

“Unveiling Housing Trends: Navigating New Listings Decline and Market Fluctuations”

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.

San Mateo County 2023

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.

Belmont 2023

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

HOUSING MARKET DIPS REMAIN IN THE MIX AS NEW LISTINGS CONTINUE TO DROP

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

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.

Median Bay Area Home Price Near Worthless

What You Hear About Median Home Values May Be Completely Wrong

The Multiple Listing Service for the Bay Area peninsula has launched the December sales stats and there is some compelling evidence that Bay Area homes values dropped slightly over 2006.

The median home price is the midpoint at which half of the homes sold for more, and half sold for less. Of course if smaller or larger homes are selling then these numbers are easily skewed—especially with a small market sample.

SMC 2007San Mateo County posted a reduction in the median home price to $885,000–a $40,000 (4.3%) decline over $925,000 in 2006.

This statistic could be wildly inaccurate though. Simply put, there’s no easy way to determine if the size homes which sold in a given year were larger or smaller than a previous year’s. Intuitively, given a large sample–totaling all sales for San Mateo County for example, one would expect the median size home to remain relatively constant and thus portray an accurate picture of the median home values. But unique market forces such as the ones we are currently experiencing are just the sort of thing that could skew those numbers. If for example, more first-time buyers purchased homes, the median size home included in the sales calculations would undoubtedly be smaller and thus skew the median price lower.

The Multiple Listing Service (or MLS system) which essentially retains all agent related transactions has its own inherent flaws. They derive the median home value by taking the median price for every home sold in a given year. If the housing market has a dramatic shift during the course of the year, it’s entirely possible that the median home price reported has nothing to do with the home values at the end of the year on December 31st.  In other words, it matters not whether home values climb for the first quarter of 2007, if in December they’ve dropped dramatically. The MLS median price is more a measurement of the average median value rather than the true median price at the end of the year.

Last year was a prime example of why reporting the median home price in this fashion is erroneous at best. In Belmont for example, there were 94 sales in the first six months of 2006 and 92 in 2007–virtually unchanged. However, the next six months after the July mortgage issues came to light, there were only 127 sales in 2007 compared to 167 in 2006. It’s a strong indication that the market changed in the second part of the year and why measuring the median values at the end of the year, rather than reporting the aggregate is a methodology more suited to a changing market.

In a small market sample such as the town we live in, Belmont, Ca, it’s even more imperative that one adjust for the median size of homes which sold. We incorporate this onto our calculations and low and behold an entirely different picture emerges.