Happy 2023! After some much appreciated rest over the holidays, we are back and ready to make the most of this year.
2022 was bifurcated into two starkly different markets. The first half of the year was as fast-paced and intense as ever, while the second half slowed down, leaving more time for buyers to make decisions AND more time for us to reflect on how we can better assist and advise our clients. We’ll dive into the state of the market below, but are excited to share some programming updates that we know will benefit YOU, our clients, as you think about real estate as a key part of your balance sheet.
In other news, we expanded our team over the last year in significant ways to better serve our clients. Karen Sand will forever retain the description as an essential worker since joining as our Operations Manager in January of 2022. Colton Hoagland is learning the business and supporting Adam, Wendy and Kat as a junior sales associate since coming on board in March of 2022. Rita Intardonato, an experienced agent whose values and work ethic closely align with ours, joined The reSolve Group towards the end of 2022. This is truly a wonderful team - we feel so grateful to have such talented, hardworking and sharp minds with us as we work towards our goal of being your trusted real estate advisors.
All the best for this year,
The reSolve Group
We write to you in the middle of the quietest time in our real estate cycle. The historical real estate season starts to slow down after Thanksgiving and picks up in early Feb (atmospheric rivers and 49ers playoff prospects can affect +/- weeks). However, the dramatic rise to just over 7% on mortgage interest rates caused a slow down much sooner than seasonality typically dictates. To see where we are, we have to slice the data in several ways. Though annual data does not tell the full story, it is useful to assure people of overall position in the market.
For instance the median price by year at the end of 2022 is actually up 1% in San Mateo County and 8% in Santa Clara County.
This is the most obvious indicator of the slow down. The reasons for drop in sales come from both sides of supply and demand. Buyers really stepped back starting in May ‘22 due tomarket fatigue, equities market turbulence and most significantly, rising interest rates. Unless extenuating factors meant sellers had to move/sell, they largely held off; perhaps a result of not getting their desired sales price, realizing the interest rate on their current home was a better option than a higher rate on a new home or they wanted to use built up equity to improve their current space instead of moving. Whatever the reason, the number of sales plummeted, down 26.5% year over year in San Mateo and 28.5% in Santa Clara county.
We’re keeping an eye on interest rates. If the Fed feels inflation is under control, they could stop raising the federal funds interest rate (or possibly lower it in the event of a recession). This will affect mortgage interest rates which will likely fall as the year goes on.
We believe we are headed towards a more balanced market after being so heavily weighted towards sellers for the past decade. If you look at inventory levels now, you can see that buyers have more choice compared to inventory levels that hung at record low levels during the pandemic. Without as much competition to drive prices up, it could be a good time for buyers who find the right house for their needs.