It has been another year in real estate with some interesting twists and turns. Interest rates went way up, housing inventory was very low, homebuyers were trying to time the market, and sellers were not motivated to move.
I ran some quick numbers from our local MLS using all detached homes sold in Martinez, Concord, Clayton, Pleasant Hill and Walnut Creek only. Any price, size or condition. The entire market! Here’s what I found:
2021 – 1,335 homes sold for an average price of $854,000. The average days on the market was 12.
2022 – 999 homes sold for an average price of $903,000. The average days on the market was 17.
2023 – 741 homes sold for an average price of $850,000. The average days on the market was 20.
A total of 45% LESS HOMES AVAILABLE TO BUY IN JUST TWO YEARS!
And that number is pretty typical of the Bay Area this year. People are just not moving!
So, what could it mean for this year? Probably more of the same. Less homes for sale AND pent-up demand from buyers that have to move or want to move. Buyers need bigger homes, better schools, shorter commutes, larger yards, or maybe they need to downsize too.
Mortgage rates have dropped significantly from October last year and are now fluttering around 6.25% to 6.5% for a 30-year fixed.
I’ve noticed that there is a lot more buyer activity over the last three weeks then we’ve seen since October and that’s refreshing!
I copied this from a mutual friend (Ciera Netherton) who shared this because I think it’s interesting for buyers to consider this year:
“I’ve been thinking about the local real estate market in 2024 and here’s my concern for buyers: When rates fall, demand goes up. When demand goes up, seller concessions drop (or disappear.)
“That means you, the buyer, may have to pay your $6,000 to $15,000 in closing costs out of pocket.
“As demand goes up, bidding wars come back, and buyers end up paying thousands over list price. (Giving your equity away before you ever make your first payment.)
“Some buyers are still holding out (for a lower interest rate) to save the extra $200 to $300/m, but if you end up paying your own closing costs, that’s like paying an extra $416/m for 2 years. If you can afford the payment (please read that sentence again) stop waiting on rates to fall. The math doesn’t math.
“Instead, buy while you can get all the concessions from sellers and refinance if and when mortgage rates really drop. (ESPECIALLY IF YOU WILL ONLY OWN THAT HOUSE FOR 3 YEARS OR LESS.) Every year you wait is one less year of equity you can cash out.
“One year, at a conservative 4% appreciation rate for a $275,000 home, is $11,000. (And 4% is super conservative for this market.) So every year you wait for rates to fall to save $300/m on the payment potentially costs you $11,000 + each year. (Not including any closing costs you had to pay.)”
So, who do I want to be my BFF this year??? Home sellers!!!
I’ve met with a number of homeowners who are considering a home sale in the next few months or two years. We’ve discussed what updates and repairs may be good to consider and who can do that work. I love this part of my job! Teaching and sharing what works and what will earn them more $$ in the long run based on what today’s buyers are looking for. It’s fun to update a house and put a neat new look in place.
Additionally, many home sellers would move today if they were able to find the house that works for them locally, and not have the stress of having to sell immediately, to make their new home purchase work. In this case, there are opportunities to connect home sellers with buyers off-market, while having more control over move out dates, closing dates and all that a sale entails.
I feel that 2024 is going to be a very interesting year, with ups and downs in the market both locally and domestically. I am buckling up for a bit of a ride as we kick off this year!!