It’s spring time! But where in the heck is all the inventory?
As I reported to you in previous months, the single-family home market appears to be much stronger in 2023 than the last part of 2022. My current prediction is that I don’t think inventory is going to increase dramatically for many years. This brings a whole new perspective to waiting for the right home. Especially for picky buyers waiting could mean years, not months. I have some advice. If you want to buy a house in this market, passively looking is not an option. In fact, making sure that you’re working with an agent that’s really plugged in and has access to off market inventory is really important.
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Buyer demand continued to rebound from the depths of the midwinter slowdown: The number and percentage of listings going into contract, and overbidding percentages continued to climb, and days-on-market to drop as the spring selling season gained traction. Buyers generally shrugged off the local banking crisis, the main effect of which, so far, has been a significant drop in interest rates in the 4 weeks after SVB collapsed and First Republic first came under pressure.
But though conditions have improved considerably, the market remains significantly weaker on a year-over-year basis, and across the Bay Area, median home sales prices have declined. However, it’s worth remembering that the market in Q1 2022 was severely overheated, and approaching the peak of a historic, 10-year boom. This will distort many year-over-year comparisons.
The number of new listings coming on market continues to be extremely low, as many potential sellers hold off from listing their homes due to the doubling of interest rates since early 2022: This constitutes a huge factor in market dynamics and is undoubtedly holding back sales activity.
Across the Bay Area, year-over-year sales declines in the highest price segments have outpaced drops for less expensive homes, and their demand-to-supply ratio – the number of sales compared to the number of listings for sale – is much weaker. Luxury home sales have been hit harder since the market correction began in mid-2022, though they too have been rebounding in 2023. April, May & June sales volumes are commonly among the highest of the year, and this is
especially true for luxury home sales.
This report created in good faith with data from sources deemed reliable, but may contain errors and subject to revision. All numbers approximate, and may change with late-reported activity.
