Spring Real Estate Market Update
The spring selling season is upon us. The first quarter of 2022 flew by so quickly and might or might not give us an early indication of what the real estate market will be like for the rest of the year!
We entered the year after a huge real estate year in 2021. There were more sales and much higher prices than in 2020. COVID caused many changes within the real estate market and forced people to make housing decisions based on their personal situations.
The most important question at the start of the year was whether the increase in prices would continue and if it would encourage more sellers to put their properties on the market to relieve the lack of inventory.
What happened as we entered 2022? We had a surge in COVID with the omicron variant. But that news faded quickly due to our high rate of vaccination in this area. The symptoms were kept to a tolerable level so that our hospitals were not overwhelmed. Russia invaded Ukraine and set off shockwaves in the stock market, along with spikes in oil and energy prices. This further added to our inflation rate which was already high. The stock market took a 10% dip earlier in the quarter but has recovered somewhat. The feds have announced that they will be increasing interest rates several times this year to control inflation, with the first one in March. Our unemployment numbers are holding steady, consumer confidence is down slightly, and real estate buyers are responding by cautiously buying homes.
Despite the first increase in the Fed Funds rate in three years, the mortgage interest rates have remained at historical lows, in the 3-4% level for 30-year mortgages, thus buyers are still getting a great deal by borrowing at today’s interest rates and paying it off with tomorrow’s dollars. The attitude lately has been if we don’t buy it today, prices might be higher tomorrow. And even if prices do drop, at least we are locked in at a very low-interest rate.
As with every year, inventory decreases near the end of the year. In the first quarter of the year, there are not many homes for sale. The same pattern was repeated this year. With good demand, properties went into contract rapidly, resulting in even lower inventory. Market statistics published by the San Francisco Association of REALTORS® show the month of supply for single-family homes is at 1.4 months. That means if no other inventory comes on the market, it would take 1.4 months to sell all of the listed homes. This is a low number historically and indicates we are still in a strong seller’s market. The end result is a very competitive real estate market in the first quarter of 2022. We have a market of multiple offers and bidding wars with final sales prices much above listed prices for most properties.
Moving forward, I see more inventory coming on as it normally does during this time of the year. What does this mean for the consumer? The best advice is to work with a real estate professional who is knowledgeable about the market and will provide you with the insights necessary to fulfill your goals in this rapidly changing marketplace.
Real estate is a lagging economic indicator, meaning that the market will follow what goes on in the economy. If a buyer has a down payment invested in the stock market, there are fewer funds available right now. Rising interest rates mean less buying power because payments are higher. More inventory means less competition. Inflation means costs for goods will go up, leaving less money for housing. All the signs point to a moderating market, but only time will tell!
For buyers, the time to make a decision is right now. There were plenty of opportunities to get into the market in the past few years at lower prices and interest rates. Prices have increased, and interest rates have gone up, but still at very low levels. Locking in at these interest rates makes a lot of sense.
For sellers, this is still a good time to sell. With the shortage of inventory and strong buyer demand, if priced correctly, you should receive multiple offers and get the highest possible price.
For people who are looking to trade up, this market is challenging as selling is easy, but finding a replacement property might be difficult. For people who have been considering refinancing, it’s time to take action now as the interest rates have nowhere to go but up.
All of the economic signals are not very positive moving forward for the foreseeable future! We are poised and positioned for a cautious rest of the real estate year in 2022.
John M. Lee is a broker with Compass specializing in the Richmond and Sunset districts. If you have any real estate questions, call him at 415-465-0505 or email at firstname.lastname@example.org.
|Richmond Homes Sold in March*|
|6038 Geary Blvd.||4||1.5||3,340||$1,200,000|
|4 Blake St.||3||2||1,555||1,400,000|
|335 28th Ave.||3||2||1,584||1,625,000|
|8234 Geary Blvd.||3||3||1,430||1,750,000|
|1833 Cabrillo St.||2||1||1,380||1,800,000|
|819 42nd Ave.||3||2.5||1,965||2,200,000|
|626 41st Ave.||5||3||2,290||2,400,000|
|675 29th Ave.||3||3.5||2,320||2,572,000|
|534 46th Ave.||5||3.5||2,508||2,900,000|
|287 24th Ave.||3||1.5||1,880||2,942,000|
*Partial listing. Source: M.L.S.
|Sunset Homes Sold in March*|
|2239 43rd Ave.||2||1||1,147||$1,380,000|
|1535 31st Ave.||2||1||1,440||1,600,000|
|2251 47th Ave.||3||1||1,280||1,675,000|
|2643 43rd Ave.||2||1||1,232||1,700,000|
|1674 35th Ave.||5||3||2,117||1,765,000|
|1283 16th Ave.||3||2||1,669||1,800,000|
|2251 31st Ave.||3||3||1,860||2,000,000|
|1770 24th Ave.||4||3||2,085||2,100,000|
|1860 22nd Ave.||4||2||1,675||2,200,000|
|1358 15th Ave.||3||1.5||1,820||2,300,000|
|109 Quintara St.||3||2.5||1,629||2,810,000|
|1591 43rd Ave.||4||3||2,400||3,005,000|
*Partial listing. Source: M.L.S.
Categories: Real Estate