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East Bay February '24 Real Estate Update Ascend RE

Ascend RE February 16, 2024

Alameda

East Bay February '24 Real Estate Update Ascend RE

The Local Lowdown

Quick Take:

  • Median single-family home prices declined from November to December, which is normal this time of year. However, single-family home prices appreciated year over year, up 11.9% in Alameda and 5.3% in Contra Costa. Condo prices fell in the East Bay year over year.
  • Active listings in the East Bay fell 27% month over month, which is typical this time of year when new listings tend to decline significantly. As mortgage rates drop, we will likely see more new listings in the first quarter, which should help alleviate some excess demand.
  • Months of Supply Inventory declined significantly in December, as sales outpaced new listings, indicating the market firmly favors sellers as we enter the new year.

 

Inventory, sales, and new listings declined month over month

Single-family home and condo inventory barely increased at all last year, which is far from the seasonal norm. In 2023, inventory didn’t have anything resembling the typical sine wave, since far fewer sellers came to the market, especially in the first half of the year, and the low inventory and fewer new listings slowed the market considerably. New listings have been exceptionally low, so the little inventory growth last year was driven by softening demand. Typically, inventory peaks in July or August and declines through December or January. However, in 2023, inventory peaked in October, further highlighting the atypical supply trend. In November and December, inventory, sales, and new listings dropped, which is normal this time of year. With the current low inventory levels, the number of new listings coming to market is a significant predictor of sales. Month over month, new listings fell 50% and sales declined 8%. Total inventory is down 18% year over year.

 

As demand slows, buyers are gaining more negotiating power and paying less than they were during the busier summer season. In June 2023, the average seller received 105% of list price, compared to 101% of list in December. However, on average, buyers paid 4% more in December 2023 than December 2022. Inventory will almost certainly remain historically low for the next few months, and buyer competition will ramp up meaningfully in the spring, which will drive price appreciation.

 

Months of Supply Inventory in December 2023 indicated a sellers’ market

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market).  The East Bay market tends to favor sellers, which is reflected in its low MSI. MSI fell sharply in the first quarter of 2023 before gently trending higher from May to November. In December, MSI declined sharply. Currently, the East Bay housing market favors sellers.

 

Bottom Line

The bottom line? One word: Competition. Sellers are seeing a hotter and more competitive market than we’ve seen in almost 2 years! If you have put off selling, but feel ready now, this is THE time to start the conversation. On the buyer’s side, Fall 2023 may have likely been the market’s lowest point. Prices for many assets are still great buys, but we are seeing a quick turnaround which we expect to continue. It’s crucial to work with an agent that can spot opportunities and act fast! 

 

Median Home Sale Price - Alameda County

 

Median Days on Market - Alameda County

 

Median Home Sale Price - Contra Costa County

 

Median Days on Market - Contra Costa County


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