“We have a storm brewing that can’t decide which way to go,” said local real estate agent Nancy Gonzalez, in response to the current housing market.
Buffeted by inflation and uncertainty, the housing market today is a mix of sellers with equity in their homes, buyers wanting to buy, sky-high rent, and volatile interest rates.
Gonzalez echoes what other real estate agents and analysts are saying about the current housing market. Regardless of the nature of the economy, a common question persists: When is or isn’t a good time to purchase a home?
“The general consensus is that the housing market is definitely improving.” said real estate agent Katherine Prinzivalli of Brentwood. “Per Trendgraphix, our area of East County; Antioch, Brentwood, Oakley, Discovery Bay, is up approximately 47% in active listings over the same time last year.”
According to Norada Real Estate Investment, closed escrow sales of single-family detached homes in California totaled 241,540 in January 2023; a 0.4 percent increase from sales in December 2022, but they represent a 45.7 percent decrease from a year earlier in January 2022 when home sales totaled 444,400.
The median home price in California fell to $751,330 in January 2023, down 3 percent from December 2022 and 1.9 percent from January 2022, which has been attributed to job layoffs in recent months, particularly in the technology sector.
In the Bay Area, median home prices saw the highest year-over-year decline in terms of median home prices, dropping 14.6 percent to a median price of $1 million. Data from Redfin Real Estate shows that the median sale price for a home in Contra Costa County as of January 2023 is $680,000, down 9.39 percent from a year previous, and the number of homes sold decreased by 45.2 percent, from 834 to 457.
Conversely, markets in Charlotte, N.C., Cleveland, Ohio, Pittsburgh, Pa., Dallas, Texas, Nashville, Tenn., Jacksonville, Fla., Kansas City, Mo., Miami, Fla. Atlanta, Ga., and Philadelphia, Pa. are projected to be the hottest housing markets nationally in 2023, while Minneapolis, Minn. Denver, Colo., Sacramento, and San Jose are markets projected to cool off due to home value decreases and slower housing market activity.
Real estate agents have mentioned the varying impact of the COVID-19 pandemic, with some areas seeing continued growth or stable home values, while other areas saw declines or stagnant sales due to economic uncertainty related to the pandemic.
“When it first hit, we did see a halt,” said Gonzalez. “However, we were able to be creative and find ways to show property and have listing appointments, mainly using video. I feel the pandemic actually was an opening to allow more people to work from home, thus causing some to want to upgrade homes for workspace. It has been said that the housing market actually helped spur the economy during this time.”
Local real estate agents say that the housing market can be affected by a variety of things, including rising interest rates, widespread fears of job loss, inflation, along with too much inventory, which can cause the market to fluctuate.
“The housing market can be influenced by various factors, such as economic conditions, interest rate, housing supply and demand, location, population growth, social and government policies,” said Prinzivalli.
Simone St. Clare, a real estate agent in Martinez, says that the housing market started off well at the start of 2022. Home prices skyrocketed 20.6 percent in March compared to the year before, which was the highest price change in more than 35 years. Those selling their homes were receiving offers anywhere from $50,000 to $250,000 over asking price, while homebuyers flocked in droves to the few properties on the market, even waiving appraisal and inspection contingencies in order to get their offers accepted.
“And then, all of a sudden, the air went out of the balloon,” said St. Clare. “Home prices have cooled off and are dropping, especially in areas that were super-hot. Homes are languishing on the market for much longer timeframes.”
Redfin Real Estate data shows that while homes in Contra Costa County sold after an average of 12 days on the market in 2022, homes in 2023 sell after an average of 45 days. Rising rents have also led to people buying homes to stabilize their payments, with price reductions of 8 to 10 percent in nearly every city in the county. What can be expected in 2023, according to St. Clare, depends on whether one is buying or selling a home because there are new guidelines for each.
“For buyers, it’s imperative to get pre-approved with a mortgage lender who can offer options,” said St. Clare. “There are new programs designed to make it easier to afford the higher rates. There is still help for first-time buyers in the form of down payment assistance and some lower rates.”
“For sellers, pricing your property correctly is super important,” she added. “With more homes on the market and fewer buyers making offers, your house needs to stand out more than ever. If it’s not model-perfect, then the price needs to reflect that. Otherwise, it will be ignored in this market. Sellers who think that they can offer a house for sale without doing any fix-up work to items that need paint, repair or replacement are fooling themselves.”
Still, looking further ahead into 2023, most economic forecasters predict that prices of homes will still slightly rise, likely beecause housing in many areas of the United States is in short supply. According to Norada Real Estate Investments, the housing inventory in the Bay Area is said to be low, but increasing.
“The bright spots in the market will be multi-family units,” said St. Clare. “There are two pricing categories of multi-family properties when it comes to getting a loan:1-4 units and 5-plus units. Both categories of multi-units will continue to be attractive to investors and/or owner-occupants.”
Prinzivalli said while many real estate agents suggest the spring and summer months as ideal times to buy a home due to the availability of more inventory, she and other agents suggested that the perfect time of year to buy a house is simply whenever anyone is ready.
“It’s always a good idea to work with a reputable Realtor who can help you navigate the buying process and find the best opportunities,” said Prinzivalli.
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