Market Predictions and Realities: A Look at the First Three Quarters

Jeff Lang October 20, 2023

Here’s what buyers and sellers need to know in our housing market.

Today, I want to delve into the market's performance during the first three quarters of this year, starting with a national overview and gradually narrowing it down to the local scene. But before we dive into the data, I'd like to emphasize something I've observed over the years: the accuracy of trends and predictions made by experts, especially amid and since the pandemic, has been consistently off the mark. So, my second point is that it's crucial to draw your own conclusions when assessing information, whether it's from the news or even from me.

Now, let's look at the bigger picture. Since 2000, housing appreciation in the Western region has outshone all others in the country, with a remarkable 206% increase. This equates to two and a half times the rate of inflation, underscoring housing as a fantastic long-term investment.

On a national scale, the number of home sales has dipped by 25% compared to last year, which itself was down 20% from the year before. The higher interest rates have deterred many homeowners from parting with their low-rate mortgages and selling their properties. As of yesterday, interest rates are averaging 7.62%, a quarter-point decrease in just a week due to global geopolitical events. However, in the past 18 months, rates have doubled. To provide some context, these current rates align closely with the long-term average.

"Demand outweighs supply."

Now, shifting our focus to local markets, specific trends have emerged. In major metropolitan areas like San Jose and Santa Clara, median prices have experienced a 5.3% decrease. In San Francisco, Oakland, and Hayward, prices are down by 11.3% from their peak in Q2. An interesting observation has been the trend of people moving away from the Bay Area, particularly to places like Austin, Texas. However, it's worth noting that the median price in Austin has seen a 19.1% drop.

Despite these fluctuations, there are local areas where home prices remain stable or even show slight increases due to limited inventory. In Burlingame, for instance, the median single-family price has risen from $2.7 million in Q1 to $2.8 million, with homes often selling at the list price. San Carlos has also seen Q3 median prices rise from $2.2 million in Q1 to $2.4 million, frequently selling for 3% above the list price. In Pacifica, homes are selling at 104% of the list price, with a median price of $1.26 million.

Key takeaways: Prices in our local market are stable or slightly on the rise due to limited inventory. The demand from buyers consistently outweighs the supply of available properties, leading to bidding wars and competitive offers, particularly for well-priced and professionally marketed properties. 

If you have questions about this topic or anything else, please call or email me. I am always willing to help!

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