Traditionally the timeframe of November and December has been the slowest two months of the year but this year is extraordinary slow.
I think that over the last few years, sellers would still list a property late in the year, knowing the property would go into escrow fairly quickly, with little fuss. Also buyers were so desperate to find a property that they would continue to search for properties right through the holidays and if something interesting would come on the market, buyers would find the time to have a look around and submit an offer, even in mid-December.
But this year is different.
Buyers have mostly disappeared and very few listings are coming on the market. Sellers sense it will be a longer process to sell and are holding off until 2023. Buyers are waiting out the storm and hoping for better conditions early next year.
As far as the properties that are selling, it is taking more days to get into escrow and the final sell price is typically a bit lower than the original list price.
Sellers are anchoring to the higher prices earlier this year and generally keeping listing prices on the higher side but buyers are coming in 5% to 15% below list, hoping to get a deal. The College Area (92115) for example averaged closed prices for single family homes about 9% below list price for last month.
A year ago, sellers were typically receiving full list price or a little more. So that is a big change in the marketplace currently. In 92115, November of 2021 had 28 closed sales but last month there were only 17 closed sales. November of 2021 had 19 days on the market but last month averaged 52 days on the market until closed. San Carlos (92119) was similar with about 94% of list price received and only 12 sales closed last month versus 24 closed sales in November of 2021. The market has clearly slowed.
Properties are still selling, but with less buyers kicking the tires, lower prices are being offered and more buyer concessions are being requested. Sellers are either taking less money or deciding not to list and waiting until normalcy occurs, hopefully in 2023.
Do not expect any sort of market crash, as property owners are currently loaded up with equity and sitting on ultra-low mortgage rates. That is another reason keeping the quantity of new listings low. Sellers don’t want to give up their mortgage rates in the 3’s only to buy another property with mortgage rates in the 6’s. So the market has frozen up a bit for casual sellers.
Looking ahead to 2023, economists expect the general economy to slow, causing mortgage rates to decrease slightly and perhaps bring more buyers into the market.
If we could get mortgage rates in the 5’s I really think the housing market would benefit with both buyers and sellers increasing their activity. Mortgage rates have dipped slightly from high 7’s in September to the low 7’s currently.
I am optimistic that in 2023, inflation will wane and the real estate market will normalize.
NOVEMBER MARKET REPORT:
92115 College Area: Median home price $860,000 up 4% from one year ago.
92119 San Carlos: Median home price $909,200 up 3% from last year.
92120 Allied Gardens, Del Cerro: Median home price $860,000 down 8% from one year ago.
– Sarah Ward is a REALTOR with Fine & Coastal Real Estate.
Photo credit: Pixabay.com
