The books on January are all closed up, so I’m ready to give our first report on the 2023 real estate market. It’s important to note that I report on closings. Most closings are for transactions that went into contract 3-4 weeks after the deals were inked, so these numbers are lagging well behind what’s happening now.
Therefore, what you see in the January numbers is more reflective of December market conditions, and not necessarily indicative of what we’re seeing today. Even so, when you look at these numbers, you may ask yourself: where’s the good news in these?
That, of course, depends on your perspective. If you’re a home buyer vs. a home owner, you’re probably delighted by the data I’ll present. In fact, you might be forgiven if you’re actually feeling a bit of schadenfreude now that it may seem the tables have turned.
But without further ado, let me break down the January 2023 sales data for my three “south bay” counties – Santa Clara, Santa Cruz, and Monterey:
Santa Clara County
New Listings: 565 (-22% vs. 723 year-ago)
Homes Sold: 301 (-40% vs. 497 year-ago)
Days on Market: 36 (+257% vs. 14 year-ago)
$/SquareFoot: $959 (-11.2% vs. $1,087 year-ago)
Sale-to-List Price Ratio: 97.7% (vs. 116.7% year-ago)
Median Sale Price: $1.5M (-11.1% vs. $1.688M year-ago)
Santa Cruz County
New Listings: 68 (-42% vs. 117 year-ago)
Homes Sold: 62 (-30% vs. 86 year-ago)
Days on Market: 54 (+74% vs. 31 year-ago)
$/SquareFoot: $738 (-7.3% vs. $796 year-ago)
Sale-to-List Price Ratio: 95.2% (vs. 102.6% year-ago)
Median Sale Price: $1.16M (-7.2% vs. $1.250 year-ago)
New Listings: 143 (-29.2% vs. 202 year-ago)
Homes Sold: 99 (-41% vs. 168 year-ago)
Days on Market: 52 (+93% vs. 27 year-ago)
$/SquareFoot: $662 (+14% vs $570 year-ago)
Sale-to-List Price Ratio: 95.8% (vs. 97% year-ago)
Median Sale Price: $850,000 (flat vs. $851,325 year-ago)
But wait, there’s more!
Depending on your perspective, those may be some tough numbers to swallow. But that was then, and this is now. Please, read on.
Typically, after the holiday slowdown, the market begins to wake up in mid-January before barreling into spring. This year though has some unique characteristics. For example, inflation has dropped substantially since June. Interest rates have been declining since November, and stock markets are up 8% (S&P) to 15% (NASDAQ) YTD (as of February 3, albeit with continuing volatility).
Despite escalating layoffs in high tech, early indications in 2023 point to rebounding buyer demand, which is also being driven in part by these softer home prices.
Anecdotally, open house traffic has jumped, more buyers are requesting listing disclosure packages, and there have been increasing reports of multiple offers and (often unexpected) overbidding of asking price.
Based on the preliminary information we REALTORS are getting in the field, it appears that buyer demand severely repressed by economic conditions in the 2nd half of 2022 has begun to bounce back.
Will this burst of buyer activity last as winter melts away and we get deeper into spring, then summer and fall?
It is obviously too soon to tell. But I’ll be keeping a sharp eye on the market and next month’s number should give us all a better indication of which way the market is headed in 2023.