For the last 10 years California real estate has experienced strong appreciation, from an average selling price of $332,000 to $783,000 and the California Association of Realtors reports the October median sales price in Thousand Oaks was $1,050,000. The number of homes sales locally has fallen 30% to 40% from last year but median price is up 12% from a year ago. Why you might ask, demand continues to exceed supply (people want to live here). Home prices for fully renovated homes are still rising, although at a slower rate. Home prices for anything less than perfect are off slightly from the unrealistic highs of April, and un-renovated homes are under pressure depending upon location and condition. Home Sellers are just now coming to grips with current conditions, something the Buyers recognized in August. Buyers are concerned about the record setting rise in mortgage rates, from 2.5% at the beginning of the year to a recent peak of 7.25% and those same Buyers are hopeful home prices will drop significantly, but I don’t believe they will… see below:
Good news for homeowners, bad news for would-be homeowners:
The Local inventory of homes for sale remains near all-time lows, and it’s dropping. We may be entering a recession (we may be in one now) but the job numbers are holding-up and Sellers are not rushing to list their homes.
Local (household) incomes and savings rates are at record highs.
The work from home phenomena continues to bring Buyers from as far away as Santa Monica to the Conejo Valley, and they think our prices are cheap.
Today, the Buyers are waiting: waiting to see if home prices drop, waiting to see if mortgage rates drop, waiting to see if the stock market recovers, waiting for some positive news. But Californians hate to wait. Based upon my experience the waiting will lead to acceptance (acceptance of current market conditions) which will inevitably lead many Buyers back to home shopping.
The largest wealth transfer in the history of the US is underway. The Silver generation and the Baby Boomers will transfer tens of Trillions in wealth to the next generation over the next 10 years. Can mom and dad help their child (grandchild) with a large down payment? Yes, they can (and they are), which helps explain the disproportionate number of cash and high down payment transactions over the last couple years.
If you’ve got a 2.75% mortgage, you’re not going anywhere.