A CAR® Market Minute

Happy December from Homes of Silicon Valley! It’s been a minute since we have presented a market minute and some new data from the California Association of Realtors (CAR)® offers a glimpse into  where housing is at.

Before we share some recently -released stats, we do want to remind you that not only are real estate trends local – they are also hyperlocal. Not only do sale and price trends vary across the state, but within the Bay Area and within individual cities and neighborhoods too. While statewide data and nationwide rate trends are still valuable indicators in understanding the market, any individual decisions you make should be rooted in your own local micro market trends, a custom home valuation (not an online one!) and where you plan to move next.

That being said, the latest CAR® Market Minute Write-Up reveals 5 key data points that provide a general overview:

#1: Mortgage rates drop after the Fed hints on smaller rate hike in December. The average 30-year fixed rate mortgage reported by Mortgage News Daily fell 34 basis points from 6.63% to 6.29% between November 30 and December 1.

#2: Government-sponsored loan limits will rise above $1M in 2023 in high-cost areas. The Federal Housing Finance Agency (FHFA) increased the 2023 national baseline conforming loan limit to $726,200 on SFRs and raised the cap for high-cost areas to $1,089,300; previous loan limits were $647,200 and $970,800, respectively.

#3: Consumer confidence dipped the week ending on 12/3/2022 based on concerns of lay-offs and job-availability in the next 6-months. However, the jobs report released the week of 12/5/2022 revealed that the US economy added 263,000 jobs as a whole (exceeding expectations) and declared an unchanged unemployment rate of 3.7%. In addition, California reported that all jobs lost during the pandemic have been recovered as of November 18, 2022.

#4: Black Friday spending and holiday shopping is up 10.9% year-over-year, however, this reflects higher prices not just higher volume. Calculations that adjust for inflation expect sales to be up 6-8% year-over-year, according to the National Retail Federation’s forecast.

#5: Construction spending has decreased on single-family homes by 2.6% month-over-month yet increased 0.6% on multifamily homes. Market conditions, materials costs and interest rates suggest a weak outlook for new builds in 2023. TLDR; new construction will not solve the housing inventory crisis in the next 12 months or probably the next 5 years.

How are you feeling about housing? Wondering if you should stay & hold or sell & buy? Looking to create a long-term real estate strategy? If you have any questions about the relative value of your current home compared to your potential next home, please don’t hesitate to reach out.

All my best,

Mark

mark@homesofsv.com