Housing Market Update for March 2023

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Real Estate

Based on how competitive the market felt in March, I was expecting an increase in the median sales price. I was not disappointed.  

We saw a median sales price of $1,428,500 in Santa Clara County (a 12.6% increase in the price of single family homes, townhouses and condos from February to March) 

There was a 68% increase in the number of sales, month-over-month. While prices are 10.8% less than last March, we are just above where prices were in August of last year after prices corrected.  

I’ve commented in the past about looking at the leading indicators to figure out where prices are headed. By that I mean the number of homes for sale (inventory), average Days on Market before an offer is accepted and interest rates.  

All three of these indicators tie in together. Inventory has been extremely limited, mostly due to an increase in interest rates. And with homes selling more quickly than in the last 12 months, inventory has remained fairly flat. 

Let’s look at the inventory. In 1.1 months, if no new properties came on the market, they would all be sold based on how quickly they are selling!  

Tying in average Days on Market, in March it was 25 days. That’s not the incredibly aggressive 11 days we saw last March, but it is 10 days faster than January and February this year.    

Interest rates have had the biggest impact, I believe. Home owners that locked in a 30-year fixed mortgage at 3% or less are not anxious to sell and buy a different home with an interest rate more than double that.  

Because of this, many of the home owners I see selling are the same that have been selling for the last 6-8 years; retiring out of the area where home prices are significantly less and buying all cash.  

I have several clients selling for different reasons, whether it be the need for more space, shifting property investments to where they’ve moved to, etc. But mostly I see homes coming on the market when people are moving out of the area or the kids selling when the parents have passed.  

The serious buyers are out there looking. I’ve seen multiple offers on many properties, and this is all due to the low inventory. 

It is interesting to see that the average list price for homes is 4.2% higher this March than last, and I think that is because many sellers are still expecting the same price they got last year. That simply will not happen and shouldn’t be expected so soon after a dramatic market correction.  

Since last July, the listed price and sales price of properties have been much closer. Before homes were priced much lower and selling for much more.  

As we progress through spring and summer, I expect the prices will continue to rise. We obviously need to track other factors that will impact the economy, like inflation, jobs and the commercial real estate market. As of now, home prices seem to be pretty stable, and rising.