Thank goodness the record heat wave throughout California is behind us. This week we have summer breezes to cool us off & blow the smoke away! At the beginning of the summer season, I penned a post that predicted the real estate market normalizing and home values cooling over the summer months. With mere days left in summer, lets look back and see how that prediction fared to what transpired over the last few months.
Buying Pace Slowed
As summer temps were heating up, the pace of home buying was falling dramatically. 30% fewer homes were purchased this June compared to the same time in 2021. Oddly, early summer is normally when we see volume INCREASE as spring-fever purchases begin to close escrow. Clearly the market was going through a change, and this shift continued through the rest of summer. Things appear to have bottomed out, as August saw a small increase compared to July, but we are still at seasonably low levels. You have to go back all the way to 2007 to see a slower summer for Sacramento real estate.
Listings Piled Up
From April 1 to August 31, we saw the number of homes for sale nearly TRIPLE. This wasn’t due to a ton of people deciding to sell all at once, but rather a back-log of homes sitting on the market from a drop in buyer demand. This sharp increase has leveled off, and the ratio between buyers and sellers has returned to a normal, pre-pandemic range.
Home Values Fell
I had predicted that fewer buyers and more sellers would result in falling home prices. Indeed, the greater Sacramento area experienced a drop of nearly 7% in the median home price from Memorial Day to Labor Day. August’s mark of $580K is still the highest ever recorded if you exclude the prior 6 months, so most homeowners are still in very good shape.
Nevertheless, the market is clearly changing and both buyers and sellers need to get accustomed to the new landscape in real estate. Like this week’s summer breeze that has removed the unusually hot temperatures, our cooling real estate values mark an end to the insanity experienced during the pandemic. This shift should make both buyers and sellers feel just fine as things have normalized heading into the autumn & winter seasons.
Feel free to call on our team & me should you need any advice navigating today’s market.