Over the last few weeks there's been a lot of concern, to say the least, for buyers and sellers in Redwood City regarding the election and the real estate market. For sellers, it's the fear of prices dropping and needing to sell. For buyers, it's interest rates rising, making it more expensive to finance a home and the possibility of home prices continuing to increase.
With prices increasing as much as 100% in some areas of Redwood City over the last five years, it's unlikely there will be a huge increase in prices, but it's possible there is an increase. At some point there will be a correction in the market — it could be next year or it could be in five years. Personally, I noticed a little bit of an uptick in the market in the transition from summer to fall, in that I was seeing more offers being made and higher prices in August/September vs. June/July. Now that we're in the holiday season, inventory will most likely remain pretty low between now and February.
What could drive home prices up in the next quarter? Historically, mid-January through April has been a very competitive time of year to buy a home in Redwood City. Typically, there is low inventory, which leaves buyers with limited choices if they are trying to buy after the holidays. Homes in great locations, like Mount Carmel and Woodside Plaza, with good floor plans and other ideal characteristics, often end up selling at a premium. And when you have homes that sell for a premium, it sets a new bar for other properties, so it's likely the next home that's a "9 or a 10" to hit the market is going to sell for an equal or higher price. Over time, that can drive home prices up.
Now, what could potentially drive home prices down? One possibility that could keep home prices from increasing is if a lot of homes hit the market at the same time. I certainly don't expect this to happen, especially with the limited number of single family homes in Redwood City in comparison to the amount of people that want to purchase them, but it is possible. Two other things that could potentially prevent home prices from increasing: if there are layoffs at large companies in the area or if interest rates increase significantly to something say, over five percent.
While at the moment there is a good deal of uncertainty with a new president going into office, interest rates on the rise, and home prices locally at a five-year high, having some uncertainty about the housing market is a pretty natural feeling. Anything can happen, but I get the feeling now through early May will probably remain pretty consistent. I think if you're selling, it's probably not a bad time to sell. If you're buying you want to make sure you're buying something with good resale potential and that will work for your family for the next 5-10 years, just in case you may need to weather any financial twists and turns in the market.
Curious to see what the numbers look like in Redwood City right now? The chart below showsQ4 so far and previous quarters this year.
Cliff Whearley has been a resident of Redwood City for 23 years and is a Realtor at Dwell Realtors, Inc. If you have any real estate questions, he would love to help!