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How quickly things can change.
When reviewing the median sales prices for detached homes in the cities from Danville to Livermore the numbers jump out at you. The buyers were out in force…and they still are. Housing statistics are often discussed on a year over year basis. The media does it and my real estate board does it when pushing stats out to us, and that’s OK in some cases, but not right now! So I put together the statistics you need to know in this market.
The home prices appear to have bottomed out someplace around the end of 2022 to the start of 2023. So when comparing the numbers from December, or January, whichever is less, through the end of March, this is what you get:
The “Days on the Market” has fallen from approximately 35 to 20 days on average, and prices have mostly increased:
Dec / Jan low March ’23 %
City Median Price Median Price increase Year over Year
Danville $1,710,000 $2.015,000 17.80% -15.76%
Dublin $1,350,000 $1,439,000 6.60% -16.58%
Livermore $ 989,000 $1,230,000 24.37% – 7.80%
Pleasanton $1,537,000 $1,855,000 20.69% -9.50%
San Ramon $1,500,000 $1,855,000 23,67% -12.71%
Pretty impressive numbers. However, not all cities are seeing the same results, yet.
When you look at the numbers for the cities listed below the results are a little different:
Walnut Creek $1,450,000 $1,507,000 +5.38% -11.35%
Pleasant Hill $ 989,000 $ 935,000 -5.46% -17.60%
Concord $ 797,000 $ 793,000 -0.50% -15.19%
San Leandro $ 790,000 $ 835,000 + 5.70% -12.29%
Hayward $ 830,000 $ 880,000 + 5.68% -20.00%
Castro Valley $1,018,000 $1,130,000 +11.00% -21.09%
These cities haven’t experienced as much appreciation in the first quarter of 2023 and they’re also off by 10 to 20% like the first group year over year.
My take away…
From this data, where we are in this cycle, we’ve likely seen the market bottom from Danville to Livermore and the same will probably be said about the other cities mentioned when we look back on this period in the history of East Bay real estate. The quick short term appreciation has been made by some, but there’s still opportunity in the long run in all the cities.
If I didn’t mention your city of interest above let me know and we can dig into those details.
Mortgage Corner:
This is where my focus will be for the next 2-3 months. The benchmark 30 year mortgage exceeded 7.00% for a while at the end of 2022 but since has found a new range of 6.125% – 6.50% in 2023 for the most part, and you see what it has done for the home prices. This week saw the first rise in the benchmark rate since March 9th. In most Bay Area cities prices have trended higher on the back of falling mortgage rates. However, there may be more good news for rates around the corner.
The next three months of CPI data releases, beginning May 10th, are going to be very important as it is anticipated that those monthly figures are going to be significantly lower than the corresponding months in 2022. Should this occur the Annual CPI number will fall and support the argument that the Feds hiking is working, that it has reduced inflation, and this should push mortgage rates lower. Lower inflation normally allows for lower mortgage rates.
If the CPI numbers cooperate we may see mortgage rates in the range of 5.50% to 6.0%. It would certainly make a case that the bottom is in on home prices and could make for an interesting summer. Certainly give me a call if you think it might be time to get yourself pre-qualified to see what your purchasing power is.
Selling:
If you’re planning to move up, and you need to sell your current home, or you want to reposition your equity in an investment property, now’s the time to do it. Let me give you a few money saving tips:
1) Sell now so you don’t get caught with excessive capital gains that would erode your profit that you want to take to the next property.
2) Push the next round of building equity into your next home so you can benefit from the next $250,000 or $500,000 capital gains exclusion.
3) Your property tax basis will be lower on the new home because it will be based on a purchase price that is likely to be lower now than in the future.
Remember, even though you may be able to sell for more in the future you will likely pay more for the replacement property as well.
Investors:
As you all know, buying investment property in the Greater Bay Area isn’t always about cash flow but rather the long term appreciation opportunity. Getting in before the mortgage rates fall is critical to benefiting from this strategy, because when rates fall, prices increase, and that’s where the opportunity to gain appreciation is. Not after the rates have fallen. Buy when rates are high! When they fall, then you can refinance the mortgage to a lower rate.
A lot of information! But a lot of opportunity, too. If you got this far shoot me a reply/feedback, let me know what you think, tell me what you want to know more about or when you might be considering buying or selling. If you have friends or family that may benefit from this info, please pass it along.
