What does the housing market and a loaf of bread have in common?
Updated: Dec 13, 2022
After a month, they both become stale!
And that is what it looks like is happening in the East Bay real estate market right now. According to Redfin’s most recent article by Dana Anderson: A dearth of buyers and relatively few new listings are leading to an uptick in homes sitting on the market longer than a month. It’s giving buyers some breathing room while frustrating sellers.
The share of U.S. homes that were listed for 30 days or longer without going under contract increased 12.5% in July from a year earlier. Put another way, roughly two-thirds (61.2%) of for-sale homes were on the market for at least 30 days, up from 54.4% a year earlier.
That’s the first year-over-year increase in “stale” housing supply since the beginning of the pandemic and close to the biggest uptick in Redfin’s records, which go back to 2012. The only time it increased more (13.9% YoY) was in April 2020, when the housing market nearly ground to a halt (as the pandemic lockdown was in full force).
For this report, “stale” refers to homes that were on the market for at least 30 days without going under contract and were actively listed on the final day of the month, according to Redfin data.
Homes staying on the market longer is a reflection of the housing market slowing in response to 5%-plus mortgage rates and a shaky economy. Rates shot up quickly in the first half of 2022, reaching 5.8% in June before dropping slightly to an average of 5.4% in July. It has taken several months of buyers backing off and sellers rushing to list their homes before the market cools further to culminate in inventory piling up.
Locally, we’re seeing the same results: Homes on the market upwards of 35+ days and price reductions seem to be happening more frequently.
The good news this week is two-fold. We’ve seen mortgage interest rates settle down at just above 5% (30-year fixed); and more buyers are starting to pick up the phone and want to see homes this past week.
I think we’re still in for more lower offers and price reductions this month in order to get buyers interested enough to get out there. However, the temperature for buyers making offers is still cool and tepid.