The market continued to slow into the final months of 2022.
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The frothy uptrend in prices has subsided. Prices aren't dramatically falling, but they have stopped going up.
Results for November and December are similar to trends that began mid-Summer.
Inventory remains low.
Interest rates remain elevated.
Total sales are down.
Prices have softened from the peek set in late Spring 2022. However, due to the absence of inventory but continued demand, prices remain elevated. Homes coming to market at "excessive" prices are staying on the market longer. Buyers, although eager, are being pragmatic. Occasionally one of the more aggressively priced homes sells quickly at a premium, but overall things are calmer, and some homes are taking weeks and/or months to sell. Average Days On Market for December sales was 57. Last year December that number was 27.
Once again, price matters and value is considered. During months of the pandemic, price seemed unimportant - all that mattered was if it was for sale.
Sellers need be calculated and strategic about how they come to market and at what price.
Currently, if a property has something in the location that makes it special - ocean or mountain views, unique lot, great street, great school district, highly desirable neighborhood - those homes are sometimes still selling at a premium to the rest of the market.
2022 finished with 1443 total sales, well below historical norms.
Fourth quarter (4Q) 2022 finished with 259 total sales.
Down 45% from 2021.
Looking back all the way into the late 90's, the only year with fewer sales was 2009, and the only quarter with fewer sales was 1Q 2009.
2021
set a record with 2216 total sales.
The 4Q of 2020 was the highest number of total sales ever recorded in the 4Q totaling 702 sales.
The pace of sales continued to slow throughout 2022.
The 30 yr. fixed rate mortgage has been range bound from 6.10% - 6.70% the past couple of months. One year ago rates were still in the 3's.
After the last two years of remarkable price appreciation, current rates are proving challenging for many buyers. These higher rates are adversely impacting sellers as well.
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December 2022 Total Sales Stats
Median Sales Price House: $2,102,500 +20%
Median Sales Price Condo: $952,500 +13%
Median Days On Market: 21
Average Sold to List Price Ratio: 97%
Inventory Supply: 1.12 months
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November 2022 Total Sales Stats
Median Sales Price House: $1,725,000 -18%
Median Sales Price Condo: $1,007,500 +16%
Median Days On Market: 13
Average Sold to List Price Ratio: 96%
Inventory Supply: 1.40 months
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What to expect from here...
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The Fed is intent on bringing down inflation. That should keep interest rates higher for longer and may push the economy into a recession. Will it be like last time? Will it be like 2008? No. The cause is different this time. Housing is not the cause, but it is being affected, and in turn it will affect the larger economy. Prices will probably drift down over time - it will depend on if demand dries up.
The pandemic rapidly accelerated price appreciation - fueled by limited supply, strong demand, and cheap money. Now, prices remain elevated, but money is no longer cheap. The financed buyer is being impacted the most by higher rates. Santa Barbara has a lot of buyers that do not need a mortgage to purchase a home. That helps sustain values.
For prices to come down, the economy needs to cool off, thus the Fed's push to raise interest rates and cool economic activity - they want the economy (GDP) to slow down. Housing is 15% - 18% of the economy. An economy that's not growing is in recession - not completely a bad thing but not necessarily pleasant for all. For inflation to retract there has to be less demand for goods and services. This will impact housing - prices and sales.
Currently, we still have buyers in spite of prices and interest rates, but we don't have enough inventory. Some of the absence in inventory is owners who are "locked-in." They have no where to go and/or no incentive to sell. It's estimated 85% of the country with a mortgage has an interest rate under 5% and many with rates under 3.5%. With the impressive increase in price the past three years, taking on a new larger mortgage at today's higher rates isn't appealing to a lot of folks, so many are sitting still and choosing not to sell.
This is a tough market for buyers and sellers. What's right for you may not be right for someone else.
Need help figuring out what's best for you?
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Front-row, 2-story, beachfront, 2 Bed/ 2.5 Bath, 1232 SF. townhouse above Leadbetter Beach.
Ocean, Sand, and Island Views
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214 South Voluntario Street, Unit A B & C
Lower Eastside
Residential Income Property
6 BD | 6 BA | 3 Detached Homes | $2,595,000
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- COMPASS Concierge -
...will help you make small investments to ready your property for sale that will help you sell more quickly and at a higher price.
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If you are thinking of selling, be mindful turn-key homes sell more easily and at higher prices than those needing work and/or updating.
COMPASS Concierge will loan you up to $40K for improvements at zero additional cost to you. $40K could be the difference in fresh paint, staging, and landscape clean-up resulting in a quicker sale at a higher price.
If you would like to know more, give me a call.
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© Compass 2023 ¦ All Rights Reserved by Compass ¦ Made in NYC
Compass is a real estate broker licensed by the State of California operating under multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075, 1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material presented herein is intended for informational purposes only and is compiled from sources deemed reliable but has not been verified. Changes in price, condition, sale or withdrawal may be made without notice. No statement is made as to accuracy of any description. All measurements and square footage are approximate. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.
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