As 2023 is coming to a close, I hope you are enjoying the holiday season with loved ones. The Bay Area’s real estate market continues to show positive gains. Let’s examine the latest news and stats.

Inventory Drops Since September

We often see a drop in inventory as we near the end of the year. This year is no exception. When comparing November 2023  with 2022, the number of available homes for sale is down dramatically – from nearly 700 homes to 500.

The benefits of homeownership are well-documented. It's about long-term benefits. You don't get better off (by) not owning a home. 
- Jordan Levine, Chief Economist, CAR

Santa Clara County Inventory Drops

Other notable statistics include:

• Median sales prices for single-family homes rose year over year, reaching $1.70M from last year’s $1.58M. 
• On average, sold homes received 4% over the list price and took approximately one month from list to close. 

• The number of sales rose modestly in November – to 544 closed deals – compared to November 2022’s 528.

The Fed, Rates & Buyer Demand

At its December meeting, The Federal Reserve has decided not to change interest rates. Their decision also indicates that they are most likely done raising rates to combat inflation. They also hinted at reducing interest rates three times in 2024. Currently, the US inflation rate is 3.14%, down from its high of 9.06% on June 30, 2022. 

30-year fixed-rate mortgage rates recently dropped below 7%, the first time in four months. It’s eased some pressure off of buyers. More importantly, the Fed’s decision about rate cuts should fuel more optimism and an improved outlook in investing in real estate. Rate cuts are likely a ways away, so adjustable rate mortgages (ARMs) may be attractive options for the near term. 

The National Association of Realtors’ Chief Economist, Lawrence Yun, forecasts that the housing market will grow in 2024. Yun predicts home sales will increase by 13.5% compared to 2023. NAR also compiled a spreadsheet comparing real estate markets’ “pent-up demand.” For the San Jose-Sunnyvale-Santa Clara market, they predict:

• 3.3% more buyers if mortgage rates drop to 6.5%
• 7.3% home price growth
• 6.6% of renters who can afford to buy the median-priced home

Jordan Levine, CAR’s Chief Economist, expects a mildly optimistic outlook for 2024 with sales and mortgage rates improving. Affordability, low housing supply, and hyper-low interest rates held by current homeowners will continue to be limiting factors.

What I'm Seeing

Let's revisit my observations from last time and see if my advice holds true:

• Preparation. This applies to both sellers and buyers. 
  • Sellers: With such low inventory, desirable homes that show well stand out.  Homes that sit typically don’t follow the market’s best practices: prepare the home and highlight its best attributes. As I complete your comprehensive market analysis, we’ll discuss how to best price your property and market it.
• Buyers: Make peace with current interest rates by thinking long-term. You have many other financing options than a fixed 30-year term. Bay Area real estate has consistently shown appreciation over the years and has proven to be a wealth-building investment. Therefore, be prepared to act quickly as new homes are put on the market.
  
  Update: Yes, inventory has seen a drop. Making your home market-ready is as important as ever. 30-year fixed mortgage rates have dropped slightly but are nowhere near historical lows. We need to recalibrate our expectations. ARMs may provide the best shot at owning a piece of Bay Area real estate, an investment that has proven decade over decade to be a winning strategy in building long-term wealth.
  
  
• Pricing is crucial. If you're selling, we need to price your home to market conditions. Sometimes market conditions change before official numbers are reported. That's one of the the many reasons why clients choose to work with me as I'm in tune with what is happening in the market before it becomes public knowledge.
  
  Update: Yes, pricing continues to be a critical piece of a successful selling strategy. A well-prepared home that's priced to gain attention shines brightly in a low-inventory market.
  
  
• Inventory is flat, and may drop going into the holiday season. Sometimes we see a rise in new homes hitting the market at the start of fall. Usually, inventory flattens or drops as we head into the holidays. However, the reasons to sell aren’t tied to the market, they are due to major life events such as divorce, death, and job transfer.

Update: Yes, the data confirms inventory has dropped over the last several months. On average, homes sold received an above-list price. 

Reach Out & Connect

I'm meeting with clients via phone, video conferencing, and by appointment. Whether you're looking to buy or sell, you need an experienced guide in this complex and fast-paced real estate market. I've helped hundreds of individuals like you successfully negotiate the most important financial transaction you'll ever make.

For buyers and sellers, I invite you to call me to discuss your situation and options.