Q4 2023 End Of Year Update: What Goes Up Must Come Down?
Dear Friends,
Prices and units sold declined across Marin in response to interest rate increases, but not necessarily in ways you would expect. With rising rates, prices finally started to soften as we moved into Q4, though to hard-pressed Buyers, that softening didn’t feel like nearly enough.
Mathematically, the softer prices didn’t come close to offsetting Buyers’ higher financing costs. Why? Because our supply remains so darn low: 40% fewer homes sold in 2023 compared to 2021 and 25% fewer compared to 2022. In those Pandemic years, Buyers and existing owners took advantage of 2.5 – 4% rates and they aren’t likely to give those mortgages up any time soon.
Sure, life changes (death, divorce, job transfer, health) will reluctantly prompt sales but as we see, they are a lot fewer. Downsizing moves from our mature owners may happen more readily as typically those Sellers are converting their equity to ready cash; not so for folks who need to upsize or want to improve their living experience.
Expect units sold to be low again in 2024 (maybe a little more than 2023) and as rates decline, look for prices to consolidate and start to increase.
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