Market Update August 2023
Westlake Village, Agoura Hills, Oak Park, Thousand Oaks and Newbury Park
By: Michael Rice | August 3, 2023
My View From Inside
All of the interest rate hikes we’ve endured over the last year were supposed to cause home prices to come down. But even though mortgage rates have more than doubled (to the high 6s), home prices continue to rise. July ended with the median price of a Conejo Valley home at $1,075,000 – up 1.6% from last year.
Median Conejo Valley Home Prices (last 12 months)
Homeowners aren’t selling
The unintended consequence of the rate hikes has been killing supply more than demand. If your current mortgage is 3%, why would you sell and give that up unless you had too? And that’s what’s happening. Homeowners are staying put and the record low inventory is what’s keeping home prices up.
To give some perspective, July ended with just 301 homes for sale in the entire Conejo Valley. Just 5 years ago, in July of 2018, we had 851 homes for sale. That’s 65% more homes for sale than we have now.
Higher rates are having an impact
Closed sales in July were down 38% (136 homes vs 219) from last year. How much of that is due to fewer buyers looking versus buyers just waiting for more inventory? It’s hard to tell, but likely a combination of the two.
One thing we know for sure is that higher rates have had a significant impact on the number of cash purchases which now account for 11% of sales (up 141% from last year).
Bottom Line…
The rate hikes have worked in reducing inflation although there’s still more to go. Historically, mortgage rates follow behind inflation which is why most experts are forecasting mortgage rates to come down over the next 12 months.
When rates come down, prices will likely go up even more which is why many buyers are electing to buy now rather than waiting for rates to come down. Yes, you’ll pay a higher rate today, but you’ll get a lower price and the ability to refinance down the road.
What to expect moving forward
- The summer lull started mid-July and typically continues through August before the fall market picks up again.
- Although inventory is down year over year, it’s up from last month. Expect that trend to continue.
- Expect no real significant change in mortgage rates over the next quarter or so. Rates should hover around the mid 6%.
- Value shoppers: If the home has been on the market for a while, don’t be afraid to hold your ground when negotiating with the seller. They’re probably getting a little nervous that they haven’t sold and don’t want their home to look stale.
Seller’s Corner
Rising interest rates and high home prices create cautious buyers. Low inventory of competing homes is keeping the market skewed slightly towards sellers. But understand that buyers are nervous and a bit fickle. It may take a couple tries to have a buyer stick. It’s critical to price your home right and do your best to keep a deal together. It’s risky to lose a buyer right now. Your next offer may be lower.
What's The 2023 California Forecast?
According to the California Association of REALTORS
- The median price of a home is expected to decrease 8.8% in 2023.
- The number of home sales is expected to decrease by 7.8%.
- Interest rates are expected to average 6.6% in 2023.
Market Snapshot
Prices
- The median price of a Conejo Valley home was up in July to $1,075,000.
- That’s now 2 months up.
- Prices are up 1.6% from $1,058,000 last July.
- And down $117,500 from last month.
For Sale
- July ended with 301 homes for sale.
- Down 20.4% from last July.
- That’s 77 fewer homes than last year.
- And 11 more homes than last month.
Days on Market
- It took 25 days on average to sell a home in July.
- Up 7.4% from last July.
- That’s 2 more day than last year.
- And 4 days more than last month.
