Hiccup or Bubble?

www.BlackhawkLivingCA.com @BlackhawkLivingCA #BlackhawkLivingCA

By Linda Kralik, Berkshire Hathaway HomeServices/Drysdale Properties, Residence since 1984

The big question of the day in the minds of both home buyers and home sellers is whether we are in a housing bubble or just a hiccup in the market. The median Bay Area home price rose at its slowest year-over-year pace in two years in January as a slowdown that hit the real estate market in September continued into the new year. The previous 13 months had consecutive months where prices had risen in double digits until September of 2018, when the market downshifted amid a big jump in inventory. Buyers backed off during the past three months of the year amid a fear of a continual rise in interest rates, a sharp stock market correction and general lack of affordability. According to a research firm, CoreLogic, the median price paid for a new or existing home or condo in deals that closed in January in the nine counties was $730,000, down 7 percent from December and up 2.2 percent from January of last year. To narrow down the data, let’s just look at what has happened in Blackhawk within the first three months of this year versus the previous year of 2018, to see where the trends are going.

March 2018 March 2019 % Change

Active 37 35 -5.4%

Pending 19 12 -36.8%

Sold 21 21 0%

In the same time period, it must be noted that the price per square foot went up 9.3% to an average of $484.00 and the Days on Market went from 52 days to sell to upwards of 96 days to sell.

Just looking at the first three months, the numbers are not really reflective of a Busting Bubble, however they do indicate a slowing down of the buyer frenzy of the past two years. Buyers are recognizing the fact that they have more choices and they are a little pickier about what they will accept and expect in a home that they are looking to purchase. Typically, our market begins to heat up right after Valentine’s day as buyers like to “Spring” into our Selling Season. That being said, the above chart shows that the number of Pending Sales (Those homes where a purchase contract has been accepted but not yet closed) is down over 36%. And this is our busiest selling time. This being the case, Sellers need to be aware that multiple offers are now the exception, not the norm and that they should be willing to negotiate on legitimate offers made on their homes. It has been a reality shock for the Sellers to make this adjustment in their thinking and how they should respond. But all is not doom and gloom. We have a very good economic outlook with many tech and IT firms getting ready to go public, which always increases our market. We have the wonderful amenities of a beautiful Country Club with ‘resort’ style living that is coveted by many home buyers. We are all very blessed to live and play in this wonderful community called Blackhawk.