As we are coming
up to the end of the first quarter, it is clear, sales are in full swing. It
seems that over the holidays, buyers took a short break from house shopping,
but many are back already, trying to purchase before interest rates climb any
higher. As we finished off last year with a seasonal slowing, the expectation
was that the spring selling season would pick up speed gradually. Instead by
mid-January we were back with multiple offers and buyers bidding over asking
price. January sales finished with a 3.4% increase from the month prior. Though
on a month-to-month basis median sales price dipped in December to $765,580, it
still showed a 9.4% improvement compared to December of 2020. The small
decrease in median sales price allowed for slightly better affordability but as
both interest rates and prices are increasing, the expectation is that
affordability will only get worse this year.
The chart above shows the latest in housing for the Central Valley. As you can tell, the number of home sales are still declining year-over-year due to not having enough listing available compared to the number of buyers seeking to purchase. Current inventory stands at 1.7 months where a balanced market should have 4-6 months’ worth of available homes. Median days on market is 10 days and the average sold price is about 0.5% above list price, meaning most homes sell for more than they were listed at. Even with the decrease in sales compared to last year, February outpaced the number of sales in the month prior which was higher than pre-pandemic periods. All of this combined shows a robust market with plenty of demand.
Mortgage rates have continued to rise steadily and expected to do so in the future with short periods of small dips in between. The current international crisis could affect interest rate but at this point it is too early tell how much of an impact we should expect.
New employment claims have also fallen significantly with California standing at about 2.62% and the absence of employees is impacting most industries.
New home builders are still struggling with shortages both in labor and material, but confidence remains strong as the number of permits pulled increased by 0.7% to 1.9 million units. Most of the permits were for single family homes but the completion will have to wait til supply shortages ease.
If you would like more information on any of this information, please reach out to your trusted local Realtor. We are happy to help!