Happy March!
We hope you’ve managed to stay dry (and warm) so far this year despite the consistent rain storms that have hit California. While we celebrate the filling of our reservoirs, we’ve enjoyed some great time in the snow and we fully expect a beautiful green spring, the rain has also been a factor in our lower inventory levels, a key metric we’re tracking to gauge our Silicon Valley real estate market.
We give a lot of airtime to median prices in our updates - everyone wants to know what’s happening to prices - but in these transition periods reviewing median price only does not tell the full story.
In this update we’ll cover interest rates, new listings coming on the market and provide updates on median price data. While we have seen a dramatic increase in buyer and seller activity since the second half of last year, it is hard to predict what the rest of the year will look like. Stay tuned for our monthly market updates and please let us know if there is anything else you’d like us to cover.
Mortgage Rates
As has been the case for the last 14 months, the biggest wildcard remains interest rates: After dropping considerably in January from a November peak, they climbed again in February, with big impacts on loan application rates. It has been very challenging to predict short-term interest rate changes.
Inventory
We are seeing a significantly lower number of new listings coming to the market this winter/spring than past years. While the rain has slowed preparation of some homes for the market (especially in higher price points) we are seeing 30-40% fewer homes on the market compared to past years. Whether it is rain, or sellers holding off on selling until they have more certainly, we agree with our analyst Patrick Carlisle, that if low inventory remains it could be a critical issue affecting our market.
New Listings on the Market by Month
Median Price
As we always mention median price is a lagging indicator, and looking back at the last three months which are our cyclical “slow season” does not give the best sense of what is to come. We believe the activity over the next three months will indicate more about the health of our overall market.
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