The market has not changed dramatically since last month’s update, but it appears that it is continuing to slow from a seller’s standpoint as well as from the buyer side. Homes are taking longer to sell than last month as indicated by longer marketing times. As of today, the average number of days on the market for active homes in the Tri-Valley is 37-days and homes that are currently pending sale took an average of 30-days to go into contract. Some homes are still selling very quickly and some with more than 1 offer, but these are rare and mostly the completely remodeled homes that standout as compared to most other homes. Buyer demand has slowed a bit in the last couple of weeks, because of the recent increases in rates to their highest levels in the last couple of months. New listing activity has also remained low with few new homes coming on the market, which is resulting in the inventory of available homes shrinking again in most cities.
Here’s a comparison of today’s active inventory levels as compared to active inventory levels last month:
Pleasanton: 108 (-13) – Dublin: 89 (-37) – Livermore: 156 (-17)
San Ramon: 110 (-46) – Danville: 119 (-1) – Alamo: 31 (-13)
As mentioned above, rates have increased to their highest levels in a couple of months as a result of the Fed’s comments a couple of weeks ago at the Jackson Hole Financial Summit where they reiterated their commitment to continue with aggressive rate hikes until inflation subsides. There is a high probability that we are going to see the Fed Funds Rate at 4% by the end of the year, which will require rate hikes of 3/4% at each of the next 3 meetings to achieve that level. This will likely cause additional increases in mortgage rates, which could have more of a cooling effect on buyer demand. There are concerns that the Fed will go too far too fast, which could cause a deep recession. Those who share these concerns are predicting that the Fed will be forced to reverse course in 2023 and have to 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.
