April 12, 2023
The current market has been mostly unchanged since my previous update. Low inventories of available homes have become the norm for the market, and there is no sign of them increasing to normal levels in the foreseeable future. Two factors are leading to the low inventories. The first is that many potential sellers are afraid to put their homes on the market due to the lack of available inventory for them to choose from for their replacement homes. This is especially true for sellers that plan on staying local, which is why many sellers in today’s market are either moving out of the state or the Bay Area, experiencing some life-changing event, such as a divorce that is forcing them to sell, or are heirs selling the home on behalf of a deceased or incapacitated parent. The second factor is that most sellers have such low-interest rates on their current mortgages that they are “rate locked” into their homes. It makes no sense for most people to sell a home secured by a 2-3% mortgage and purchase a new home with a 5-6% mortgage. The “rate lock” is a relatively recent phenomenon that started last year after the FED began its unprecedented rate hikes that more than doubled interest rates in a matter of months. As mentioned in my previous update, many predict rates will fall below 5% by the end of the year, and I believe this will be the case. If this happens, it may have a positive impact on inventory levels.
Buyer demand has been robust, and there is a lot of competition for the limited number of available homes. Two of my recently closed listings were over $3,000,000, and both of them sold very quickly. One of the homes never officially went on the market before selling, and the other home sold within four days after receiving three offers. Many homes in all price ranges are receiving multiple, over-asking price offers, with a recent home in Del Prado receiving 33 offers in the first week! It is a great time to be a seller if you’re not purchasing another home locally.
I am surprised by the strong buyer demand and don’t know how long these conditions will last, so I am advising my clients considering selling this year to do it sooner rather than later, so they can take advantage of the strong seller’s market. As we saw last May, the market can change and cool off very quickly.
Stay up to date on the latest real estate trends.
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