April Newsletter

Dear Friends and Family,

I thought for this month I would delve for a moment into the state of the markets and where I think the closest pressure points are. Rates are up in the mid to high 4’s right now for a 30 year fixed note. I’m sure everyone remembers that we were sub-3’s in January. If you’re watching whats going on then you know we’re headed for the 7’s this Summer. What does that mean? It means if you’re a seller, you want to get your home on the market sooner than later for the most favorable selling conditions (more-so if you’re in the sub-3 range); if you’re a buyer and you’re planning on using debt to make a move, you also want to get moving sooner rather than later. I think the rate hikes will result in a shrinking pool of buyers, which is great for those of you tiring of being one in a huge stack of offers, but I also know that inventory is at all-time lows and it will take years to bounce back from this shortage, hence, demand will stay even if price increases begin to slow. The last piece of the pie is that, even in the high end market here, many of our clients collateralize debt at some point; and especially at the sub 3-5M level, many homeowners have taken advantage and refinanced into interest rates they may never see again- these same folks are unlikely to sell anytime soon, thereby contributing to a likely continuing inventory shortage of the next few years.

The other shift we had heard a lot of whispering about was the reversing of the great migration back to the primary and metro markets. I have not seen much of that. I have friends in completely seasonal vacation markets like Tahoe or the Hamptons or some of the Hawaiian markets that have seen some reversal of decisions to move full-time, but for the most part everyone we’ve sold a home to in the last 2 years is very happy here with no plans to leave. And then there’s the War in Ukraine – I have not seen this affect our market so much. In speaking with friends and clients with skin in the game here, the thought seems to be more along the line of “if the war comes over here, all bets are off anyway”. Its a bleak lens to look through, but I can’t say I disagree. I also see many people looking to move some of their capital away from the equity markets and into real assets to protect against growing inflation – that seems to be a common feeling. So my overall feeling is it remains a good time to make a lifestyle decision here on the Peninsula, and demand is still there.

As for what we’re actually seeing trade here in the high-end, even the 10M plus stuff has been going in contract in week 1, with quick closings and in some cases multiple offers. The market continues to be mostly driven by finished product, but doesn’t seem to be replacing most of that product as it gets snapped up. A lot of sellers that were planning on doing something already have made a move, hence you can expect to see a lot of the big hitter agents not doing as much volume this year.

A few items of note relative to our immediate area:
List Price to Sale Price ratio is 99.8%
Months Supply of Inventory has dropped to 1.6 months
Avg. SP is up 21% YTD and Median SP is up 7%
The # of sales is down about 10% for the first qtr. Compared to Q1 2021
Active Inventory is still in the basement (in the 370 actives range for 4 months in a row)
As always, scroll down for a link to market stats by area on our website, and please see all (3) attached market action reports. Reach out to me if you know of someone looking to sell their home, as we have a multitude of buyers in all ranges.

Cheers,
– Ryan