I’ll be honest. It’s taking everything I have to NOT write about the possibility of a government default if Biden and McCarthy can’t find an agreement over the debt ceiling. You should see how the media frames the impacts on real estate and housing - words like “eviscerate”, “devastating”, and “catastrophic” are being tossed around - it’s hard to look away.
But, the truth is that the odds that an agreement isn’t reached is very, very slim. Best to focus instead on what we do know to be true…we are at the end of the spring market.
Most Realtors consider Memorial Day weekend as the end-cap of the spring market. While we don’t yet have the data on home sales (escrows haven’t yet closed on homes that went into contract at the tail-end), we do know the number of new listings that hit the market.
This is valuable information when we compare it to past years. Knowing the trajectory of new homes available for eager buyers can give us a sense of regional impacts after the 2022 interest rate increases, as we know that the cost of borrowing money impacts both buyers and sellers. New listings are one of the most important engines of a thriving real estate market, so it’s important to keep an eye on the trends.
(Reminder: homeowners are reluctant to give up their low low interest rate to jump into a new home with a higher interest rate, so the number of new listings has resultantly dropped.)
Let’s pull out some observations:
As we know, the “pandemic years” saw a dramatic jump in the number of available homes as people were eager to move up and away. Interest rates were artificially low and encouraged a wave of home ownership transfer like we’ve never seen.
In June 2022, interest rates started to climb and uncertainty was in the air, this was the first major shift in sentiment and you can see it in the numbers - Albany was the first community to react but there was a slowdown across the board
By the time spring 2023 came around, the pendulum had officially swung. Historically Oakland experiences the largest swings in real estate trends and the data is consistent
The outlier? Kensington! Kensington had a measurable uptick in the number of new listings in spring 2023
We’ll know the full picture of home value in about a month and we’re happy to circle back to this analysis with updated numbers. Our prediction? While the number of new listings swung wildly in the past year, we predict that the data will show more stability in home prices.
The basic economic principle of supply and demand plays a role - where supply decreases and demand holds, the prices will remain high. For that reason, folks who are in a position to sell now are still enjoying strong results on their home sale.
If the past 4 years has taught us anything, it’s that the unexpected is the one thing we can count on. While we hope that macroeconomic forces remain stable and favorable (eg. “soft landing” vs. recession), we still believe in East Bay real estate as a wise investment that time-and-time again proves resilient in the face of uncertainty.
Share your thoughts with us! We’d love to hear them.