Welcome 2023 with an out pouring of new listings. As we ended 2022 the number of active listings began to lessen by the month, week and day; until we had the old stand firm group who just wanted out. As I look at the Hot sheet I have established with MLS Listings I see all the new listings for the past 7 days; along with, sold, pending, contingent, list price decreased, canceled, expired and withdrawn. The new listing's out distance the sold's so far. Price cuts are starting to emerge.
This action is unusual for the beginning of the year. It is not abnormal for listing's to expire and cancel or withdraw at the end of a year. They normally stay off until after Valentines Day and then flood the market. How best to understand the increase is to think about the economics in our situation.
The Media Commentary is now on higher interest rates a Recession and unemployment. What is unique about this time around is that the inventory is still low and buyers are still active. This is irrespective on economics. We have seen a 10% drop in housing prices in the past 12 months. More of that decline came in March after the FED increased rates by 3/4%. Commercial properties have been the hardest hit as Virtual work places are more common. San Francisco is a Ghost Town as compared to the past. Financial firms which dominated San Francisco were replaced by Technology firms. Technology firms went Virtual during the Pandemic never to return back to the office.
What is unique about our Silicon Valley Residential Real Estate Market is we are still in a Seller's Market. Irrespective of the price cuts and sale less than list, buyers are picking up new properties. Over priced homes languish on the market as they should. Under priced home are bid up. Speculators, Fix and Flippers are still active and now looking at listing's to find their next target to update and sell for profits.
In the past Commentaries I stated that the FED was after the Inflation in assets and not necessarily food and goods prices. When I look at the tech stock prices seeing 60% or more declines all seem to be the norm. Expansive hiring and real estate purchases or leases have stopped. Now comes the point that layoffs of the expansive strategies; along with, reducing footprints in real estate to match layoff and virtual employees.
As my Mother once said, "The Road of Life is full of potholes and unexpected delays", so we are here. We will not know if this is a delay or pothole until it passes.
What we are in is an Era of Opportunistic Strategies. Opportunity will come only when we look and have the right agent to direct the search or sell real estate. Opportunistic Strategies will be in the Depressed Properties Category. Foreclosures will not be as common as they have been in the past. Today we will see Estate/Trust Sales, Relocation and Divorce. The former two will dominate, in my opinion and experience.
According to the U.S Census report at year end, the State of California had a net movement out of the State of some 340,000 or so. When one considers the in coming new Californians were dominated by those crossing the border, income and tax revenue must be looked at carefully. Corporations have moved out, individual of upper incomes have moved out. That in itself will stop any aggressive pricing and multiple offers.
Mortgage rates have declined while the talk of another increase in rates by the FED has been dominant. That tells me that the rate increase will be minimum, 1/4%, and that the top of the rate rise is either here or in sight. I also look at the 10 Year US Treasury bond at 3.42% and a 30-year Mortgage at 6.09-6.15 and see the spread has narrowed. At one point the spread was 4.00 interest rates and now it is less than 3.00 interest rates. We call that Basis Points. one basis point is .01 of a percentage point or .0001%
My call is buy a home and negotiate a price that is reasonable based upon must recent sales 30 days is best.
Sellers must become realistic. The days of over bids are gone. The days of putting in aggressive pricing is gone. The day of pricing below last sale is here!