January 5, 2023
The real estate market in 2023 is picking up where it left off in 2022, with very low inventories of available homes. I see no end in sight for the low inventory conditions we have been experiencing for several years. It may get worse as the higher interest rates could dissuade many people that have low-interest-rate loans from selling their existing homes. Buyer demand increased in November and December of last year due to rates coming down from the highs seen in previous months. Many buyers jumped back into the market with the dip in rates, and there has been competition for some homes with the increased demand.
Here's a snapshot of the current inventory levels with last year’s number in parenthesis for comparison purposes. As you can see, we are starting the year with much more available inventory due to reduced buyer demand compared to last year’s frenzy.
Pleasanton – 42 (8) Dublin – 44 (19) Livermore – 54 (33)
San Ramon – 38 (23) Danville – 56 (32) Alamo – 16 (11)
I have read many market predictions for 2023, and most are expecting values to continue to decrease slowly, at least through the first half of the year, before stabilizing. Some outliers predict a significant downturn of 20-30%, while others predict a slight increase in values in some markets. A significant downturn is very unlikely, given the tight inventories. I feel that we may see a slight drop in values in the first few months of the year, but I think values will level off or even increase slightly in late spring or early summer, depending on what happens with rates. There is much talk about an impending recession, and there is a good chance that the Fed will be forced to reverse course on their rate hikes to stimulate the economy. Lower rates would fuel buyer demand and could result in an increase in values. It is going to be interesting to see how it all unfolds.
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