February Market Update

April 4, 2023

Real Estate

February 2023 Market Update: SOLD Homes Down 27.5% Year over Year

Hi friends, I’m a bit late in getting this report out, so I apologize for that. The Fresno Association of Realtors publishes the market statistics for the combined Fresno & Clovis area around the middle of the month and, it’s always for the prior month. So, this report is for the month of February and published around the middle of March.

Okay, now that we covered that, let’s take a quick look at what the numbers are saying.

We’re Still Way Down but Better than January!

When I wrote the January Market Update BLOG, we were down in actual home sales, -36% YOY (year over year). For February, that number has improved to -27.5%. That’s a good thing. I’m certain that other extenuating circumstances in addition to just the Fed rate hikes have definitely contributed to this. The weather being the biggest culprit here. If folks have been considering selling their homes or are in need of selling their homes, many have undoubtedly decided to wait for the spring months when the weather improves. I can’t exactly say that I blame them.

March was an interesting month. Of note, we had 3 bank failures and 2 of them were the 2^nd and 3^rd largest ever recorded. The Fed’s aggressive rate hikes have very much contributed to this as each time they raise rates, treasury bonds then pay a higher interest rates and people are pulling their money out of the banks in droves to put it in other higher yielding investments. This is creating a huge liquidity crisis for the banks, and it’s been directly caused by the Fed (in my humble opinion.)

After the Silvergate, Silicone Valley and Signature Bank crashes, many were speculating that the Fed at their March 21, 2023 meeting would reverse their strategy and ease up on rate hikes so as not to incur additional bank failures. At the very least, perhaps they would leave the rates alone and continue to let the market acclimate. However, that did not happen. Jerome Powell being ever obstinate, held the course and again raised the Fed Benchmark rate by another .25%, giving us 9 rate increases in a year’s time.

These rate hikes have led to what is being called the “locked in” effect. According to Goldman Sachs, 99% of borrowers have a mortgage rate lower than 6% (or the current market rate). Of those, 28% locked in rates at or below 3% and 72% locked in rates at or below 4%.

So, if you took on a $700,000 mortgage with a 7% rate, your total monthly payment would be $4,657. But with the same size loan at a 4% rate, your monthly payment would be $3,342. Let’s say it’s a 3% rate with the same size loan, your monthly payment would be $2,951. It’s the golden-handcuffs of mortgage rates, and it’s keeping homeowners with low rates from selling and turning some into landlords.

Days on market (how long a home is for sale before an accepted offer) rose from 12 days in Feb 2022 to 43 days in Feb 2023 which was a 258% increase YOY. Keep in mind, this is an average and actually, not what Linda and I are experiencing in the field. Inventory is so low that when a nice, clean home (that is priced right) hits the market, it’s still going fast with multiple offers and sometimes even for over-asking. So, buyer perception is a bit skewed here if they think they are going to be getting a great deal.

This leads to our average sales price for the Fresno & Clovis area. It has only decreased -1.28% year over year moving from 390K in February of 2022 to 385K in February 2023. All in all, this market is a bit weird to sum up but in essence, extremely low inventory is keeping the prices up.

Is it a Good to Sell Your Home

If you are in a position to sell, then yes absolutely. That’s because prices are still extremely high. To be honest, I’m not sure how long that will be the case.

Recent Case Study

We recently listed a home for one of our long-time clients. However, not before taking a hard look at what steps needed to take place in order to achieve the highest resale value. Through our TMG Concierge Service, we had the full interior of the home painted, one room had the carpet replaced and the others cleaned. We had half a dozen cracked tiles replaced and our cleaning crew went through with a fine-toothed comb completing a thorough deep clean including windows, screens, etc. There were also flowers planted in the front yard which really contributed to curb appeal. The result? The home went into contract in just 4 days. Also, the Zillow Zestimate adjusted 100K dollars within a day of us listing. That’s how far off their estimate was. If you want the real number for your house, reach out because the online estimates are frequently way off.

In closing, people will always need to sell and buy homes (in any market), and the homes that shine like a diamond are always going to distance themselves from all the rest. If you are selling, you truly do only get one chance at a first impression so make sure it’s a lasting one. We’ve been helping families do just that for the past decade now while simultaneously helping them to maximize their selling price to its full extent in the process.

If this is something you’re considering, give us a call we’ll roll up our sleeves and get to work on helping you achieve your real estate goals and objectives.

All my best!