Market Update November 2022
Westlake Village, Agoura Hills, Oak Park, Thousand Oaks and Newbury Park
By: Michael Rice | November 2, 2022
Released November 2, 2022
My View From Inside
Half as many homes sold in October in the Conejo Valley compared to last year (80 vs 164). However, home prices rebounded in October (+12%) after ending 26 consecutive months of price increases last month.
A recession is 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. After the real estate market crash of 2008, many people equate a recession with a housing crash. That’s rarely the case (Read: Why 2022 isn’t 2008 Again). 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.
Many experts are forecasting mortgage rates to drop in 2023
The Mortgage Bankers Association is forecasting mortgage rates to drop to 5.3% next year (from approx 7% today). The reasoning is that the Fed is acting aggressively to reduce inflation by raising interest rates. At some point the economy will slow to a point that will require the Fed to change course and reduce rates to avoid a deeper and more prolonged recession. A drop in mortgage rates next year will increase housing demand which can lead to a shift back towards a seller’s market.
Historically, mortgage rates fall during a recession.
Bottom Line
You may be thinking, shouldn’t I just wait for rates to come back down? If the experts are correct and rates eventually begin to drop next year, all those buyers waiting for rates to drop will come roaring back to the market driving up prices and increasing competition again. Conversely, if you buy today, many sellers are getting desperate and will take a low offer. Yes, you’ll pay a higher rate today, but you’ll get a lower price and the ability to refinance in a year or so.
On a scale from 1-10: Are we in a seller’s market?
What to expect moving forward
- Expect the holiday slowdown to continue as we get close to Thanksgiving offering good opportunities for buyers to negotiate.
- Expect mortgage rates to continue up in the near term, but start to ease next year.
- Expect low inventory of new listings as sellers stay put unless they need to sell.
- Expect price volatility as the price correction finds its bottom.
Seller’s Corner
If you have a home ready to put on the market, get ahead of the market and price it at the lower end of the price spectrum. The days of “testing the market” at a higher price are behind us. Buyer’s are a lot more price conscious these days, but are still ready to pay a fair price.
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 October at $1,050,000.
- That’s now 1 consecutive month up.
- Prices are up 12% from $937,500 last October.
- And up $93,741 from last month.
Homes for Sale
- October ended with 332 homes for sale.
- Down 23% from last October.
- That’s 100 fewer homes than last year.
- And 38 fewer homes than last month.
Days to Sell a Home
- It took 45 days on average to sell a home in October.
- Up 3% from last October.
- That’s 2 more days than last year.
- And 0 more days than last month.
