Nationwide, home prices are dropping… inventory is up but affordability is tough with higher persistent interest rates and prices still too high. What does this mean to you as a seller? What if you’re a buyer? (Let’s face it, most sellers are also buyers!) Let’s get into what the housing market looks like and what YOU need to know.
Home Prices Will Dip 1% by the End of 2025
This report says that, except for a brief period in 2023, home prices have been rising year over year since 2012… a prolonged seller’s market. Things are changing (at least nationally).
Inventory is up, buyer demand is low. This situation will likely push home sale prices down in two ways, the article says:
- Discounts on list prices: Homebuyers will be able to successfully negotiate prices down for marginal homes.
- Lower list prices: Motivated sellers will price their homes lower.
- (TVD Bonus) More seller concessions: Buyers will ask for, and sellers will agree much of the time, to seller help with closing costs, mortgage rate buydown, and other expenses.
What About California's Housing Market?
In California, there is a “surge” in housing inventory… but the reason isn’t healthy. More sellers are putting their homes on the market; new listings are up 9% in April, year-over-year. That part is good… it’s the fact that “…the biggest driver of the state’s inventory boom is a prolonged, historic slowdown in sales.” For almost two years now, home sales in California are below the level of the 2008 “great recession”.
Why is this the case? California homes remain largely unaffordable and high home prices are not coming down even with more housing inventory.
Help for Housing Affordability
One way the affordability problem is being addressed is that builders are building smaller homes. This article reports, “In response to affordability concerns and persistently high mortgage rates, many builders have shifted their focus to homes with smaller footprints and lower price points.”
Examples of a reduced listing price, year-over-year, and a smaller home are:
- Oxnard, CA – 11.6% cheaper and 2.4% smaller.
- San Jose, CA – 4.5% cheaper and 11.5% smaller.
- Little Rock, AR – 12.9% cheaper and 9.7% smaller.
- Colorado Springs, CO – 6.5% cheaper and 13.8% smaller.
Lessons for Buyers and Sellers
For sellers; way too often what you could sell your home for now is not what you bought it for, or could have sold it for, back in 2021. The article says that your home maintenance and improvements probably won’t get you a substantially higher price but it could help your home sell quicker. Also, be ready for lower offers… it’s not an insult but rather a place to start negotiations. Keep in mind, too, that sellers need somewhere to live and typically become buyers.
For buyers; now is the time to to get a good home at the most affordable price. No more bidding wars (like in days gone by) but submit a fair offer based on the current market today… and see if the seller is open to concessions to help pay for closing costs and other things.
Treasure Valley Dave's Thoughts
Location, location, location… the age-old mantra of real estate. Nationwide market trends are informative, but what happens in the local market is really what counts. Our home prices in the Treasure Valley, after dropping from the Covid high, have been holding steady for several months… even during the Springtime when we typically see home prices rise. This may all of the price drop that we get… holding steady.
I found curious that California is experiencing an “inventory boom” from existing homes coming on the market… and staying on the market for a “prolonged, historic slowdown in sales”. Is this a sign that California homeowners are wanting to move out to other states that offer a better quality of life (like Idaho!) but can’t find buyers? Will this situation get any better for sellers in California? Affordability, or lack thereof, is what’s keeping people from buying… and home prices in California are not dropping AND the cost of living in California is going up and up and up (gas prices, for one example).
If you find yourself in some place you want to move from, be realistic when it comes to selling your home and keep in mind the reason you are wanting to move. If your “WHY” is big enough, your “HOW” will find a way.
And if you’re thinkin’ that moving to Idaho might be the thing to do, just let Mareen and me know when you’re coming and we’ll spend some time together exploring the Treasure Valley! Just call, text, email or smash that Contact Us button and let’s get connected! Maybe we can do lunch too! 🙌
