For many potential home buyers, a house available on the market for greater than 30 days in early summer is a red flag.
But a month may very well be a brand new normal within the Bay Area. In Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara counties, about 53% of energetic home listings in June 2024 were “stale,” sitting available on the market for 30 days or more with no contract signed. That's up 6.5% from last June, based on a brand new report from real estate brokerage Redfin. Nationally, the variety of stale listings in June was 64.7% — nearly 9% higher than in 2023.
“Sellers aren't finding buyers as quickly as they used to,” says Sheharyar Bokhari, senior economist at Redfin. “Home prices haven't really come down because inventory has dropped to really low levels across the country, especially in the last year.”
But that low inventory results in more unused properties could seem counterintuitive given the upper demand and increased competition brought on by low inventory. If there are fewer homes, why aren't buyers rushing to make offers? The sellers are responsible.
Anticipating higher demand, home sellers are setting their home prices too high in comparison with what the market will bear, real estate experts say. Higher prices combined with high rates of interest mean higher mortgage payments. As a result, home buyers unwilling to make higher payments are leaving their properties available on the market longer within the hope that sellers will lower their prices.
But they’ve little incentive to achieve this in the event that they must pay pandemic-era rates of interest of two to 3 percent to get seven or 6.8 percent to purchase a brand new home, Bokhari says.
Within the Bay Area, sellers in Alameda and Contra Costa counties saw the best year-over-year increases in stale listings. Nearly 53% of listings in Alameda County were available on the market for greater than 30 days — a 7.6% annual increase as of June 2023 — while in Contra Costa, nearly 50% of listings were stale, a 7% increase.
Increases were also seen in urban areas – San Francisco, Oakland and San Jose. San Francisco recorded the best variety of aging homes, with 62.5% of energetic listings available on the market for not less than 30 days – a 2.1% increase from June 2023. Although Oakland had fewer aging properties – 50.8% – its share increased 6.9% yr over yr.
In San Mateo and Santa Clara counties, nevertheless, there have been only minor changes.
The market in Redwood City, for instance, “is still very hot,” said Mimi Quach, a San Jose real estate agent. Most homes sell in lower than two weeks, and Quach hopes her client's Redwood City home — which was listed on Redfin 38 days ago — will sell inside 10 days of showings this weekend.
In very affluent areas akin to San Mateo and Santa Clara counties, potential buyers can often pay money, thus avoiding each mortgage payments and interest.
“The people who can really buy right now are the higher-income people,” Bokhari said. For homes in Contra Costa and Alameda counties, the rise in home inventory may very well be as a result of a more limited pool of potential buyers, he explained.
For Alex Khodadad, a Contra Costa County and East Bay real estate agent, these longer “days on market” numbers are more normal. As long as a house is priced accurately, it might probably sell inside 30 to 45 days, Khodadad said.
“Markets have never been the same since the pandemic,” Khodadad said. While sellers were concerned about slower turnaround times and buyers were hesitant to purchase at high rates of interest, “they are now getting used to it,” he said.
Quach said she sees more unused inventory in San Jose, but added that it “really varies on a case-by-case basis” and is more more likely to occur with difficult-to-compare properties.
While some sellers are getting lucky, others have needed to compromise. Sellers who’re unable to seek out buyers may resolve to rent out their property within the hopes of securing some money flow, Khodadad said. Others who don't wish to take care of the logistics of renting may resolve to take the house off the market, do some renovations to it after which relist it, he added.
Buyers and sellers are also waiting to see if rates of interest will fall in the approaching months. According to Freddie Mac, rates of interest have fallen barely because the starting of July.
For Khodadad, a falling rate of interest signifies that inventory and provide may finally be catching up, as he hopes for “more movement” out there towards the top of the summer.
Originally published:
image credit : www.mercurynews.com