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The Monica & Mandy Group |
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October 2022 Report Q3 median sales prices declined considerably from the overheated market in 2021 and early 2022, partly due to seasonal trends – sales prices often drop in summer – but part of the decline was clearly due to increasing interest rates, inflation and stock markets. After the drop in demand in the summer, sales numbers have been low but stable.  However  there is far less overbidding and the number of days on market is increasing. Though sales occur in every month of the year, listing and sale activity typically drops as we approach Thanksgiving. Slower markets can offer opportunities to buyers. |
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Monica & Mandy's Real Estate Q&A |
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So many clients have been asking the same question: Will interest rates come down and if so, when? Buyers want to know what do if they can no longer afford the home they want – and sellers want to know what to do in response. The worldwide inflation brought on by the pandemic, and the Fed’s response in raising interest rates in the U.S. will affect many parts of the economy, particularly real estate. Some jumbo mortgage rates have risen above 7% and many buyers have paused to see if this is a short- or long-term issue. No one knows for sure but buyers and sellers will adjust to the new reality – buyers with more flexible financing and sellers by adjusting their price to where the market is. We have seen volatility before, and our market has managed to survive very well. It will this time too. |
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Comparisons with the crash of 2008 have been made, but the cause of the 2008 crash – soaring mortgage delinquency rates and a flood of foreclosures  – does not apply today. As shown in the chart below, loan delinquency rates are close to all-time low and most homeowners’ mortgages are held at historically low rates. T here hasn't been a surge of desperate sellers, in fact, new listing numbers are actually down from last year. Stock market declines, though substantial, do not compare with those seen in 2008-2009, and employment remains very strong. This does not minimize the correction the market is going through. |
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In our current market, it is more important than ever to price homes correctly. As shown in the chart below, listings that require price reductions before selling take much longer to sell and sell for significantly lower average values than homes priced correctly. |
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Conversely, overpriced homes provide opportunities for buyers who carefully track time on market and price reductions and react accordingly. These buyers almost always face reduced competition from other buyers – often no competition – and allows for more aggressive negotiation of the purchase price and terms of sale. The chart below shows that more and more buyers have taken this approach as 31% of home sales have occurred after price reductions. |
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We have buyers looking in Atherton, Menlo Park, Palo Alto, Woodside, Portola Valley, and Los Altos Hills in prices ranging from $4M - 15M and are always looking for pre-market opportunities or properties coming soon. If you know of any properties that fit, we would love to hear about them! |
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