In ‘normal’ years the real estate resale industry follows a predictable pattern. July and August are considered two of the slower months of the year. As the weather gets hot, families go on vacation and then turn their attentions to going back to school. Once the Labor Day festivities are over, the distractions go away and it’s considered our second selling season all the way until Thanksgiving. So, what does the fall season look like in 2023?
Lately in our Coldwell Banker office meetings the talk has been of a busy fall, with more listings and buying activity. I’m not convinced. From where I’m sitting my phone has been ringing with clients interested in selling, but most people are thinking of selling sometime next year. I literally met with two sellers in the past week, and both will be selling sometime in 2024. This is a great time of year to get plan of action in place for 2024. It's also a good time to be preparing for a sale in the fall, because low inventories will continue to benefit sellers.
It's no secret that this year we’ve had an issue with anemic inventory levels. Realtors have been dropping out of the business because there are simply not enough transactions to sustain the number of agents in the market. Realtors like myself have a pretty established clientele, and our business volume is reliable. For example, I just sold three houses in the past two weeks, which is fairly typical for me this time of year. It helps to have been selling houses full time since 2004. Newer Realtors who have not established themselves are going to have their work cut out for them in the second half of 2023.
I get the feeling we aren’t going to see a big boost of single home sales activity this fall. I think it will notch up a little, but not I don’t see sellers coming out in their typical bunches after Labor Day. Townhomes and condos may be different though, as the market has held its own this year but hasn’t displayed the upward momentum we’ve seen in single family homes. High interest rates have everything to do with that, as it costs significantly less to rent than own if you ‘only’ have 20% down. Until rates drop back into the 5’s, we could see some price erosion in the townhouse/condo market.
The single family home market in Marin is different. There are lots of people who have and make lots of money, who can put down a higher percentage of cash, and often all cash when they purchase. So, interest rates haven’t been an issue for those buyers. Low inventories have been the main problem. There’s just not enough to choose from and still too many buyers going after what little is available. This makes it a good time to be a seller in Marin County. Most of the time that’s true anyway, especially for people who have been in their homes a long period of time and reaped the benefits of appreciation and paid down/off their mortgages.
One of the main reasons we aren’t going to see our typical inventory bump after Labor Day is that too many people are locked into low interest rate loans. They don’t see selling a house with a 2.5- 4% mortgage to buy with another with a 7% mortgage as a good idea. You can't argue with that logic. This means only people who truly need to sell will do so. Unless people need to, they don’t want to leave their Marin homes. Events like the three D’s (divorce, death and displacement: job relocation or loss) will always drive a steady amount of the business. In times like these the percentage of the D’s is higher due to lower overall volume.
We are also not seeing as many people downsize and move out of state as we have in the past. The oppressive heat (over 110 degrees 31 straight days) and critical water shortages in Arizona have people deserting the desert option. Prices in Oregon and Washington have been on the rise for years, and every year those options become less affordable. Plus, the northern wildfire problems are just as serious as ours. While I’ve been to Florida and I enjoyed my visits, the heat (100 degrees water temperatures!), red tides and algae blooms along with sea level rise and hurricanes are really making it an unattractive option.
So where are people going? They are staying put, because in the words of the great red ruby slippered one, “There is no place like home.” As long as we can afford to live here, Marin is a great place to be.