2022 Year in Review | Conejo Valley
2022 started off with the hot market we had become accustomed to over the last couple years – low inventory, low interest rates, bidding wars, and rapid price appreciation. That was the case until May. Then mortgage rates started to rise and kept rising. In fact mortgage rates more than doubled in just a few months for the first time in history. However, mortgage rates did start to come down at the end of the year.
The interest rate shock seemed to cause the market to shift overnight – and the local market corrected quickly. Home prices peaked in May in the Conejo Valley at $1.315 mil and ended the year at $988.000.
Once the market adjusted and the initial interest shock wore off, buyers started to come back. Record low inventory stabilized the market and kept home prices from pulling back more allowing the market to tread water over the last couple of months of the year.
Moving on to 2023
A recession may be coming, but that doesn’t mean a real estate market crash…
The consensus opinion among many CEOs and economists is that we will enter a recession early 2023 that will last about 6-12 months and shouldn’t be too deep. GDP is forecast to drop 0.5% in 2023 and unemployment is expected to rise from 3.7% to 4.4%.
After the real estate market crash of 2008, many people equate a recession with a housing crash. That’s rarely the case. In fact, home prices have gone up 4 out of the last 6 recessions.
You could argue the real estate market has already been in a recession since sales and prices have drastically dropped from the peak in May 2022.
While housing is traditionally one of the first sectors to slow in a shifting economy, it’s also one of the first to rebound.
What to Expect for 2023 Home Buyers
Three main factors are top of mind for home buyers going into 2023: What’s going to happen with mortgage rates, home prices, and inventory of available homes?
Mortgage rates: The consensus opinion is that mortgage rates will drop throughout the year ending the year in the mid 5% range. Declining interest rates will bring more buyers back into the market as the year progresses keeping home prices stable and inventory down.
Home prices: The California Association of Realtors forecasts that home prices will drop 8.8% next year. However, the suburbs are the main beneficiary of the flight from the cities which is why the Conejo Valley will likely outperform state averages next year while many of the major cities will see declining prices. I believe the market correction has already happened in the Conejo Valley and home prices, at worst, will be flat in 2023.
Inventory of available homes: In my opinion, this is the biggest challenge we face going into 2023. The Conejo Valley has been built out for decades and demand has only increased. Low inventory will continue in 2023 as homeowners don’t want to sell and give up their low interest rate unless they have to (meaning a job transfer, divorce/financial reasons, or death).
Buyers bottom line…
Fewer homes will sell in 2023, prices will remain relatively flat for at least the first half of the year sustained by record low inventory. Mortgage rates are forecast to drop later in the year which is expected to lead to the return of bidding wars and price appreciation going into 2024.
If you’re on the fence about buying in the short term, early 2023 is the time to jump in before prices begin to surge once mortgage rates ease. You’ll likely end up with a home at a lower price and the ability to refinance at a lower rate once rates drop.
If you are looking for a home, here’s a great place to start: CONEJO VALLEY NEIGHBORHOOD TOURS.
Conforming Loan Limits 2023: L.A. County $1,089,300, Ventura County $$948,750.
What to Expect for 2023 Home Sellers
The last time the market corrected back in 2008, it was a terrible time to be a seller. Demand was low, many homeowners were underwater, and the few buyers who were out there had lots of homes to choose from. That’s not the case this time around. Homeowners have equity, and in many cases, lots of equity. And our local inventory which was around 2500 homes in 2008, is under 300 homes today – historically low.
However…it’s definitely not 2021 anymore. Buyers are much more cautious these days and don’t feel as much of a need to pounce on homes quickly. Now that prices are flat and rates are expected to drop, buyers are less incentivized to act immediately.
All that means is that we’ve gone back to a more “normal” pre-pandemic market. In other words, sellers (and their agent) need to work a little harder to find a buyer. Pricing is incredibly important again. Making your home “show ready” and easy to see matters. Being open to negotiation is expected.
Sellers bottom line…
There’s certainly no need for sellers to panic. Demand is still relatively strong and will likely increase as the year progresses. Plus, low inventory will keep competition in check. It may take a month or two to find a buyer and you may not get your asking price. That’s not unusual. Getting 10 offers in a weekend well over asking price – that’s unusual!
Thinking about selling? Start here: Selling Your Conejo Valley Home
If you would like to discuss how you can get into a new home or help you sell your current home, contact us at 818-384-9929 or Michael@ConejoValleyGuy.com.
Relocating to The Conejo Valley?
The Conejo Valley is a great place to live. We’re known for our relaxing lifestyle with little traffic, low crime, excellent schools and a real sense of community. We’re our own little bubble that people from all over the country choose to raise a family or just enjoy an easy lifestyle. We’re surrounded by rolling hills with abundant hiking trails if that’s your thing. Or maybe grabbing a coffee in the morning and enjoying a glass of wine at the Stonehaus winery in the evening is more your style. Come check it out. I’d love to help you make the move!
