Let’s see what others are saying and a few statistics:
November Santa Cruz County Market Stats:
- SFR (Single Family Residential) Sales were down 45.5 % year over year
- Median Price for SFR resale homes was down 0.8% year over year
- Median Price for SFR resale home in November was down 7.3% from October
- Average Sales Price fell 3.6% year over year.
- Inventory was up by 104.9% year over year.
- Sales Price to List Price Ratio went to 100.8% from 99.6% in October
- Homes in escrow fell 12% from last year
Where are we going in 2023 with Housing?
- Buyers struggle with current prices and mortgage rates.
- Many homeowners will simply not sell in this market, wait for a better market, and keep their low mortgage rates.
- The housing market is experiencing stubbornly high inflation, steep interest rates, ongoing geopolitical uncertainties, and political instability, to name a few.
Let’s hear from a few prognosticators to see if we get any sort of a consistent prediction:
- California Association of Realtors:
- SFR Sales are forecast to decline by 7.2%
- Median home price is forecast to decline by 8.8% in 2023.
- Housing affordability is expected to drop to 18% in 2022, down from 19% in 2022
- NAR’s Lawrence Yun Predicts:
- SFR home sales are forecast to decline by about 7%
- Home prices are forecast to increase by 1%
- Large home price drops will be mitigated by severely low inventory
- Short sales are almost impossible because of the significant price appreciation of the past 2 years
- Economic indicators point to mortgage rates topping out
- He also predicts a strong rebound for housing in 2024 with a 10% jump in home sales and a 5% increase in the national median home price.
- Home and rental prices will continue to climb in 2023, though more modestly.
- Mortgage rates will remain high though they will soon level out, averaging 7.4% in 2023 and by year’s end going to 7.1%.
- Sale volume is expected to continue to fall to 14.1% lower year over year in 2023.
- Prices will continue to rise though at a slower rate, likely a 5.4% price increase Year of Year in 2023
- Inventory is rising and will continue to rise, predicted to spike by 22.8% (excluding new construction) though some of the rise will be due to longer days on market, not necessarily a lot more homes for sale.
- New Construction is anticipated to fall about 5.4% year over year.
- Mortgage payments are expected to be about 28% larger than in 2022 and twice as large in 2021.
- Inman Headlines:
- There is no housing bubble: Likely no systemic drop in home values.
- Mortgage Rates Will drop: Likely in 2023 the Federal Reserve will start pulling back and allow rates to begin slowly stabilizing.
- Don’t expect inventory to grow significantly: Homeowners don’t want to lose their mortgage rate so they will wait to sell.
- No buyer’s market but a more balanced one. Buyers market is defined as having more than six months of available inventory, last occurring in 2012. Not likely anytime soon.
- Seller’s will have to be more realistic: Listing prices will likely see a decline in the coming year.
- Workers return to work: As businesses clarify their long-term work-from-home policies, it will allow workers to make decisions about where to live.
- New Construction activity unlikely to increase: Permits for new home construction are down by over 17% year over year. Supply chains still have issues and homebuilding costs do not sync up with what buyers can pay.
- Not markets are created equal: Market’s with accelerated home price growth likely will see prices fall by a greater percentage than other parts of the country.
- Affordability will continue to be a major issue: The mortgage rates and stubbornly high prices will keep the affordability low.
- Government will start to take housing more seriously: Cities and counties will likely start adjusting their land use policies to free up more land for housing, as well as utilizing tax increment financing tools to increase building.
If you can find clarity among all this data, let me know! Let’s schedule a call to talk about your real estate needs and the 2023 market. Or coffee/tea on me, let’s get together.
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