The market has slowed since last month’s update, although not dramatically. The slowing market is resulting in declining property values. I had a long conversation with an appraiser at one of my listings last week, and he has seen a decrease of about 1% per month over the last couple of months. He estimated that the overall market is down about 20% since the peak in March. I have seen many recent sales that support this 20% decrease. As of today, the average number of days on the market for active homes in the Tri-Valley is 39-days, and homes currently pending sale took an average of 34-days to go into contract. There are still a few homes that go pending very quickly. For instance, my recent listing on Vermont Place in Pleasanton sold within one week, and we received 12 offers. The home checked all the boxes for many of today’s buyers, and we had more than 120 people visit the open houses over the weekend.
The recent .75% rate hike appears to have put a damper on the already slowing buyer activity and many sellers due to a new phenomenon known as “rate locked.” Prospective sellers that would like to sell their homes and move up are now in a position where they cannot afford to do so because rates have increased too much, so they are locked into their current homes. This could further intensify our ongoing lack of inventory problem. Inventory levels dropped in all the Tri-Valley cities over the last month. See below for details:
Here’s a comparison of today’s active inventory levels as compared to active inventory levels last month:
Pleasanton: 95 (-13) – Dublin: 78 (-11) – Livermore: 148 (-8)
San Ramon: 93 (-17) – Danville: 98 (-21) – Alamo: 30 (-1)
Rates have reached their highest levels since 2009, and after last week’s stronger-than-expected jobs numbers, another .75% rate hike is expected at the November Fed meeting. Concerns are growing that the Fed will increase rates too high and too fast, resulting in a deep recession. Those who share these concerns are predicting that the Fed will be forced to reverse course in 2023 and must cut rates again to strengthen the economy, so it may be an opportunity for those purchasing now to refinance their loans into lower rates sometime in 2023. Many buyers are considering interest-only loans or other creative financing options such as buy-downs to offset the higher rates and help with affordability in the short term until rates go back down and they can refinance into a lower long-term fixed rate.