What a difference a year makes. Last year at this time, the market was easy on sellers. Buyers knew inventory was low and competition for available homes was high. As a result, it was not uncommon for sellers to receive multiple offers within a few days of becoming active on the market. It’s quite a different market this year. Inventory is up, unit sales are down, and sellers are facing a few more challenges.
The Current market
As of February 5, there were 834 active listings in Santa Clara County. That’s a little more than double last year (376). January unit sales (SFRs) this year were 361 vs. 450 last year. So, even with twice as many homes available for sale this year, fewer were sold than last year. For the first time since 2012, the sales-to-list price fell below 100%, an indication of softening prices. The average price in January was 1.7% less than January of last year.
A return to “Normal”
The last couple of years had some people thinking low inventory, multiple offers, and soaring prices established the “new normal.” Perhaps that was the new normal for a seller’s market, but this year’s market resembles a classic balanced market where time on the market is longer, price changes are less drastic, and sales are more heavily negotiated. In the broader view, beyond the last 6 years of the seller’s market, this current market is normal.
Readjustment is not easy
It’s always a challenge to readjust when something good ends or is taken away. For buyers, if/when interest rates return to historical norms of 6%-7% it will be a very challenging adjustment. For sellers, it takes a little more time and effort to generate offers in today’s market. Negotiating a contract is more contentious. Prices are generally lower than last year. No doubt it’s a tougher market for sellers and they must readjust to the current market conditions.
The Good News
The good news is the market is still healthy. Local data shows a strong economy that is normally very supportive of a strong real estate market. There’s plenty of qualified buyers in the market to drive strong sales. Sellers just have to work a little harder to secure the deal.