That Was A Nightmare. This Is Just A Correction.

For much of the past two-and-a-half years, it has been a housing market free-for-all, with bidding wars, multiple offers over list price and homes purchased sight unseen. But all of that is changing as the housing market appears to be making some much needed corrections in 2023. Note that the forecast is for a housing market “correction,” not a housing market “collapse or crash.” It’s also important to note that national statistics and data does not typically reflect the range of housing market conditions locally. Home prices in the U.S. have risen by more than 30% over the past three years. In some local markets, prices have shot up even faster. The run-up in home prices was driven by rock-bottom mortgage rates and pandemic-fueled demand. Now, mortgage rates have risen, (doubled) and the pandemic is easing, which has led to a significant cooling in the housing market and a slowdown in price growth. As demand has stalled and price expectations are being reset, home prices in most local markets are coming down off their pandemic peak of May 2022.

But it is important to note that 2023 is not 2008, when home prices fell by 40% or more in some places due to the perfect storm of loose credit standards, a surge in subprime lending, an oversupply of homes and rising unemployment.  That was a nightmare!  This is just a correction.

But the national figures do not tell the whole story. Housing market conditions in 2023 are poised to be very active in our local market. Sacramento was just named “Best Place to Live in California” by Forbes, indicating that we’re still a good value based on all that we have to offer.  However, that doesn’t necessarily mean that we won’t see a continued cooling of price appreciation and sellers having to make concessions for buyers - something we’d quickly forgotten over the past three years.

What is a prospective homebuyer to make of all the prognostications? First, know that even as the housing market resets in 2023, it is still going to be a challenging environment for buyers. With limited inventory comes a need to move somewhat quickly when you see something you like.  Home shoppers should be prepared with their financing and offer strategy in place so they can make an offer when they find the right home for them.  Second, opportunities for both buyers and sellers will vary tremendously depending on location and price range. It’s going to be important to price your home based on the current market, not based on 2022 sales.  And third, you should not let media headlines tell you whether it is a good time to buy or sell. That big financial decision is 100% personal and needs to be made based on the individual circumstances and needs of each person or family.

Right now what I’m seeing most often are sellers of the age of 55 or older taking advantage of the newly revised Prop.19 which allows you to transfer your current tax base to a more suitable home.  Here’s how it works… If you sell your current home for $600,000 and are paying property taxes based on when you purchased that home (obviously for much less); then you buy a home that suits your current needs for $750,000, the first $600,000 will be based on your current property tax bill and you’ll only pay the increase on the difference of the $150,000.  This change in the law is allowing people to move into that one-story home anywhere in California, or downsize into something smaller and cash in their equity. Maybe you want a bigger home on the golf course, but not that big tax bill.  Call me if you’d like to discuss how that can be done!  You can also google Prop 19 California for the details.

As I’m sure you know, my business is based on working with people who know and trust me.  Your personal referrals mean the world to us!  If there’s anything I can do to answer questions or help anyone you know, it would be my pleasure.  Thanks in advance for thinking of me when the conversation turns to real estate this year.

Be sure to watch for "Coffee with Carol" a livestream on Facebook that will look at what’s happening in our local real estate market, keeping you up on the trends and giving you an opportunity to ask the questions that you want answers to. Send me a friend request and I’ll see you soon!