June Market Update

Redfin recently reported that there are currently 500,000 more sellers than buyers in the market and is predicting a fall in home prices. While the exact numbers are suspect and likely overestimated, it certainly appears that sellers currently outnumber buyers in the Tri-Valley market, making it a great time to be a buyer, as there are many homes to choose from and little competition.

The current interest rates are the biggest barrier for most buyers and the main reason we are seeing an imbalance between supply and demand. If you’re selling a home, having patience and realistic expectations is very important, as Tri-Valley homes are sitting on the market for an average of 40 days, with a large percentage of them experiencing price reductions and/or selling for less than their asking price. We are still seeing some homes sell for over the asking price, but these cases are much fewer and farther between.

Regarding inventories, it appears we are stabilizing in most cities after seeing large increases over the past few months. As you can see in the graph below, Dublin and Pleasanton each had a very small increase in inventory, while Livermore and Alamo saw a small decrease. Danville and San Ramon both experienced increases, but not dramatically. The average days on market slightly increased across the board. If historical trends continue, we will likely stay at these levels throughout the summer and into early fall.

There are two schools of thought right now on where interest rates are headed. Some believe the economy is strong, that we have dodged a recession, and that we’ll see inflation resulting from the tariffs. If they’re right, rates will continue to climb from today’s levels, which are the highest we’ve experienced in 18 years. Others believe the economy is not on strong footing, that we have not avoided a recession, and that the tariffs will not be inflationary. If this is the case, rates should come down.

This is where a crystal ball would certainly come in handy, because there is data supporting both sides. Strong income and employment numbers support a strong economy, while the lower-than-expected inflation numbers last week point toward softening economic activity. We are in unprecedented times, so no one knows what will happen. What we do know is that higher rates would push more buyers to the sidelines, further slowing the real estate market, while lower rates would result in a massive influx of buyers who have been waiting, which would lead to a much more active and seller-friendly market.