New Year Market Update
Happy New Year! I hope everyone had a great holiday and that your year if off to a good start! Natalie and I took Jack up to Tahoe for a few days to play in the snow and spend time with family. I'm excited for what this year will bring — for our family, The Front Porch, and my work at Dwell Realtors.
If you're thinking about buying or selling a house this year, the first quarter may be a good time to make the leap. Here's an update on where the market is as we head into 2017.
Supply & Demand
Historically, the number of new listings between January and April is pretty low compared to other times of the year and the listings that do hit the market in the first quarter sell quickly. It's basic supply and demand. There are more people that want to buy homes in Redwood City than there are homes available on the market.
Many people interested in selling their home will wait until spring and summer. While it might be a more convenient time to sell, there are typically more properties on the market then. Higher inventory creates a more inviting stage for buyers, and they have more of an opportunity to shop around for deals. However, if interest rates increase, waiting for a deal may turn out to be a wash, or even more expensive.
Interest rates have increased substantially by 0.75% +/- and they may continue to rise. The cost of the 0.75% rate increase for a $1M mortgage translates to a monthly mortgage payment going from $4,490 to $4,919 — that's $429 per month or $5,148 per year. If rates increase by another 0.5%, the monthly cost will go up an additional $297. To sum it up, people are worried rates are going to continue to increase and want to buy a home before that happens.
Most buyers in the area are looking in the $1-$1.5M price range, and I think we'll continue to see the most activity there. The average sale price in Redwood City in 2016 was $1.4M. The $1.5-$2M range is also fairly active, but once you get around $2M, the pool of buyers noticeably shrinks.
Check back for our upcoming report on how the numbers in 2016 compared to previous years. Happy New Year and thanks for continuing to read The Front Porch RWC!
Cliff Whearley has been a resident of Redwood City for 23 years and was named Realtor of the Year 2016 at Dwell Realtors, Inc. If you have any real estate questions, he would love to help!