Well that was fast: January is just about in the tank, and I feel like I have whiplash. Spring is definitely in the air. Thankfully we’ll soon be enjoying another spate of rainstorms to help fill up the reservoirs and recharge our precious aquifers. But before long we’ll be in for that long stretch of sunny weather that California is famous for…and why we pay the big bucks to live here.
But will the Bay Area real estate market likewise enjoy a long sunny stretch this spring, and deeper into the year?
To be sure, there is a lot of excitement in the air about 2024. As I’ve mentioned in an earlier message or two so far this year, there is much anticipation in the real estate community that 2024 will be a much better year than 2023.
In fact, it could hardly get worse, absent a home price collapse. And while there is no shortage of people – probably even the great majority of them – who are hoping for a slump in real estate prices so they could say “I told you so” and then hop into the real estate market themselves…a plunge in prices has yet to show even the faintest signs of appearing.
In fact, there is some concern in the buying public that real estate prices are about to begin climbing upward aggressively. But you know me (or maybe you don’t!) and I always want to look at the cold hard data. The data are usually pretty reliable, even if the same can’t always be said for my inferences from it.
To get a feel for how the year is shaping up thus far, I looked at my canary in the coal mine, my bellwether county of Santa Clara, to see how it’s doing in January 2024 vs. January 2023. Anecdotally, I’d heard from a number of agents – and my own experience in the field mirrors this – that so far the real estate market is off to a strong start this year.
But what do the pesky data show?
They show the same thing. Here are some quick stats for single family home sales in Santa Clara county, year-to-date 2024 vs. YTD 2023:
Closed Sales: 320 +20.8% (vs. 265 year ago)
Median Price: $1,721,000 +14.7% (vs. $1,500,000 year ago)
Days of Market: 23 -34.3% (vs. 35 year-ago)
Price per Square Foot: $1,101 +14.4% (vs. $962 year ago)
% Sales over List Price: 53.4% +86% (vs. 28.7% year ago)
New Listings: 600 +31.6% (vs. 456 year ago)
Those are some pretty healthy numbers, to say the least. Of course, one month does not a trend make, and if you ask me, I’d say that these numbers are reflective of the fact that the market has been juiced by lower interest rates, a surging stock market (where a lot of people get their down payment cash from), and extremely low inventory resulting in brutal competition between buyers.
Speaking of brutal competition, it is instructive to see the percentage of homes selling over list price jumped up 86% compared to the year ago period. This clearly shows more than anything the kind of dog-eat-dog competition for the scarce housing available.
Remember too that these January numbers are largely reflective of what was happening in December, as homes typically take 3-4 weeks to close on average. Conventional wisdom has it that December is a bad time to sell a home due to the holidays, but that’s more myth than fact. Your experience selling a home in terms of days on market and sale price will always comes down to the balance of supply vs. demand.
The most thought-provoking number to me in this block of statistics is the new listings, and this number is all about January. People who expect (or fear) a continuing surge in prices ought to remain very mindful that pricing is all about the balance between supply and demand. Not only do more listings mean more to choose from for buyers, it will also temper the market if there aren’t at least as many new buyers to make offers on them.
While supply is still low, it wouldn’t take long at all for a deluge of listings to swamp the market and pull prices down.
Which is why I say: if you’re thinking about selling your home in 2024, what are you waiting for? More competition? My advice is to strike while the iron is hot, and that’s as good an adjective as any to describe this early Spring 2024 real estate market.
Ready to move? Give me a call and get packing.
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