The economic headwinds impacting California real estate since spring – high inflation, soaring interest rates, declines and volatility in financial markets – continued to take a toll on the autumn market. Large year-over-year drops in sales activity, overbidding and appreciation rates, and substantial increases in price reductions and days-on-market were the norm in September and October. On November 10th, however, a decline in the latest monthly inflation reading led to a sudden, significant drop in mortgage rates though remaining much higher than last year – and a sizeable rebound in stock markets. It is too early to know if the positive direction of these changes will be sustained over the longer term, and what their exact effects will be on housing markets in coming months.
Across the state, tens of thousands of homes continued to sell in early-mid autumn – a considerable, though declining proportion still selling quickly over list price – but the general trend was cooling demand. After years of holding the balance of power, sellers have reacted to changed circumstances in different ways: Besides increased price reductions since spring, the number of new listings coming on market is well down year over year, and a higher percentage of listings is being removed from the market without selling. The economy and housing market remain in a period of adjustment, causing many buyers and sellers to be more cautious as they wait to see how things will settle out.
The market now enters the 2-month, mid-winter holiday period, which typically sees the year’s lowest levels of activity: The numbers of new listings and of listings going into contract usually plunge to their annual lows, and an increasing percentage of sellers, especially in higher price segments, pull homes off market to await the new year, or early spring. (Many listings taken off market in November and December will presumably be relisted in Q1 2023.) Still, buying and selling continues, though at reduced levels, and this can be an excellent time for buyers to aggressively negotiate prices.
Market dynamics and statistics vary by county, property type and price segment.