When Buyers Flee, Do Prices Drop?
Supply and demand has a way of finding level water. Home buyers are retreating, but not vanquishing. Interest rates are rising, and buyers are feeling inflation.
Silicon valley is Cooling Fast
In some areas, a new 10% year-over-year uptick in the housing supply following a 43% decrease in inventory at the end of 2021, suddenly an uptick in housing inventory is beginning to result in lower list prices.
Both urban and rural cities in the north have undergone a cooling. San Jose is number 1 and Oakland is number three on the list of cooling cities while San Francisco comes in at number 10.
Boise, Denver and Tacoma (along with other cities like San Diego and Austin) saw real increases in population and home values in the last few years. Homes in these areas are no longer receiving the bidding wars of last spring.
People who can afford to buy right now could get something for $100,000 or $200,000 less than a few months ago.
In Santa Barbara we are seeing lots of price drops.Homes that sold quickly for $1,300,000 - $1,500,000 last summer are now around $1.2MM - $1.35MM
- There is currently only a 3.3 Months of supply of homes which is tight because 4.6 months is the norm.
- Current National amount of “active listings” is 754K. Pending listings take up 38% of these homes. In a “normal market” only 25% of active listings are under contract.
- Buyers are waiting for rates to come down, prices may flatten but there is no bubble that will burst. Buyers are currently playing musical chairs, and as soon as we see rates come down even 1/2 a percent how many will be trying to sit on the same two chairs once again?