New Year Market Update
It’s officially a new year. Whether you’re someone that likes to set goals and plan the year in January (guilty) or you tend to take things more month by month, it’s a great time to take a look at where the real estate market is and consider if it’s a year to make a move. 2019 might be the time to scale up to a larger family home, downsize for retirement, or take the plunge and invest in your first house or an investment property.
2018 in Review
2018, perhaps more than previous years, was full of ups and downs in the real estate market. Compared to previous years, the numbers remained on an upward trend. The average sale price for a home in Redwood City peaked in 2018 at $1,722,983, up about 10% from 2017. Here’s a snapshot of the past 10 years in real estate for Redwood City.
Overall, we saw a lot of appreciation in the first half of the year and some depreciation in the second half as the market began to shift. We can get a better idea of how things played out over the year by taking a look at the numbers quarter by quarter.
The first quarter was extremely competitive for buyers and getting an offer accepted was challenging. It felt like recent comps no longer mattered — if you were making an offer that was in line with comps you didn't stand a chance in most cases. Instead, people really went above and beyond the list price to get an offer accepted. And if your offer required any sort of contingency, that didn’t fly.
About half way through the second quarter the market became noticeably cooler. Inventory began to build in May with springtime sellers coming in hot. Buyers who didn’t find something in the first quarter started to get fatigued, which seemed to reduce the amount of buyers out there.
Almost immediately into the third quarter, we started to see (in most cases) no more than 2-3 offers come in on homes that showed well and were priced right. Moving further into the third quarter, many homes would only see 1-2 offers. We also started to see more homes sit on the market for three weeks or more before selling.
The fourth quarter was just about the complete opposite of the first quarter. Many homes began taking 30+ days to sell, and when they did, many were selling for under list price. We welcomed an old friend back into our lives — the price reduction. There were nearly four times as many price reductions in the fourth quarter — 58 reductions in 2018 vs. 15 in 2017.
January 2019 — What's Happening Right Now
If 2019 is anything like the last year, and previous years, we'll likely see pretty low inventory through March or April. There should be more on the market come May and into June/July. I believe sellers will have the best odds in the first quarter this year.
Right now, there are some really good opportunities for buyers. Interest rates just dropped and there are some houses that have been sitting on the market long enough that sellers may be more willing to negotiate. It’s been rare to say this in the past few years, but buyers may find some good deals on the market, and purchase a home for about 10% less than in the earlier part of last year.
You might be thinking if I buy something now, what will happen if prices continue to drop? Even with the market changing, I don't think strong buyers should be afraid. If you buy something right now and the value drops by another, say 10%, you should be fine if you're planning to stay there for 5+ years. Interest rates are low enough where you would be able to pay off a good portion of your loan in 5 years and evaluate where the market is then. If you look at the past, prices typically do not stay low in Silicon Valley, so 2019 could be your year.
If you need advice or would like to schedule a complimentary consultation to look at your home’s value, I’d love to meet with you.
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!