Looking at the numbers from the local real estate market from last year and comparing them to the first two months of this year, there’s some improvement. Our average sale price is higher, and the average days on the market (or the time it takes from when a property is listed for sale to when an offer is accepted) is lower.
What has contributed to the improvement in the market?
If you’ve been following my posts (and read the October market update from last year), you might recall where I cover inventory patterns.
Due to the low inventory we’ve experienced since November and the sharp drop in home prices that took place last year, there are a lot of people interested in buying in Redwood City at the moment, especially when it comes to homes in prime areas and on large lots.
Wait a second. Interest rates are sky-high, and people are getting laid off. Am I missing something?
With our average sale price around $2M+/-, many buyers are using jumbo loans to finance home purchases. Depending on the lender, relationship discounts, and whether our clients opt for an ARM or 30-year fixed mortgage, some are financing homes with rates in the 4s and 5s, which isn’t all that bad.
The layoffs are definitely concerning, but with the unemployment rate in San Mateo County at 2%, there are still a good amount of buyers ready to take advantage of lower prices. The unemployment rate could obviously change, but it’s much lower than what we experienced in 2008-2009 when it was 8-9% or 4X higher.
Of course, no one has a crystal ball, but what does the remainder of this year look like for buyers and sellers in Redwood City?
Buyers will likely experience low inventory until May or June. Between now and then, they may encounter competition with other buyers, which could lead to overbidding or waiving contingencies to make an offer more attractive to sellers. However, waiting until there is more on the market in a few months may or may not pay off. It’s hard to find the right house, and it’s possible you might kick yourself later for passing on a good one. You also have to keep in mind that while it may be less expensive later, interest rates could increase, making it a wash. And once we get into the fall, the cycle will start over, and we could hit the low inventory issue again.
For sellers, if this year is anything like previous years, now through about April/May might be the most rewarding time to sell. Most sellers that have the luxury to decide when to list their home will wait until the warmer months. Some do this because they want to wait until the school year is over, while others believe buyers might see more potential in a property with spring flowers and a blooming garden. Because of this, we typically see the highest number of new listings in the second and third quarters, which often creates a less competitive market. Once we head into July/August, we typically see an increase in days on the market, which can also mean lower offers if a house sits for more than a few weeks without going into contract.
Whether you’re buying, selling, or doing both, or if you’re just curious, please feel free to reach out anytime. I’m always there to help you look at the options and figure out a plan that makes the most sense for you.
Cliff Whearley is the Broker at Whearley & Co. Real Estate. He has been a resident of Redwood City for over 30 years. If you’re buying or selling a home or have any real estate questions, he would love to work with you!
March 4, 2023