Across the Bay Area, Q3 median sales prices retreated dramatically from their spring peaks. Part of this was due to seasonal trends – median sales prices often peak in the Spring, then drop in summer but part of the decline was clearly due to changing market conditions prompted by shifts in interest rates, inflation, stock markets and consumer confidence. The number of sales fell by 26% caused by lack of sufficient inventory and rising mortgage rates. Only 44% of homes traded above list price this quarter vs 75% the previous two quarters of this year signaling a gap between seller expectation and buyer realites.
It appears that after the big drop in demand in early-mid summer, conditions have mostly stabilized. In general, sales numbers are no longer appreciably dropping, though overbidding continue to decline and days on market to continue to climb.
When looking at recent market changes, it is important to remember how overheated the market was in 2021 and early 2022 with comparisons distorted by the unusual and sometimes frenzied conditions that prevailed then. The economy and real estate market are still in a period of adjustment.
There has been no surge of desperate sellers. New listing numbers are actually down from last year. Stock market declines, though substantial, cannot compare with those seen in 2008-2009, and employment remains very strong. This is not to minimize the correction the market is going through. There are certainly major economic challenges at play right now likened to a slow leak in an over-pressurized tire rather than a blowout on the highway at high speed.
The relatively short autumn selling season began after Labor Day and runs through mid-November. The typical mid- winter holiday slow down then runs through mid-January. Though sales continues in every month of the year, listing and sale activity drops dramatically as we near Thanksgiving. There will be opportunities for buyers in this slower season but the the selection of inventory tends to be more limited too.
The only thing that is certain is change. We are seeing an adjustment to a more normal real estate market similar to market conditions in 2019. Marin is weathering the changing conditions better than most markets with our relatively limited inventory, unparalleled lifestyle and proximity to a world class city.