Despite all odds the housing market is chugging along beautifully in our area. Prices remain unbelievably high, and despite the interest rates wavering between 6.25 and 7.25 as I write this, buyers are still lining up for the very few homes available to them in our vaunted area. There are bidding wars going on in almost every neighborhood. Prices are high to begin with, and I have recently represented buyers writing between 20 and 80% over list prices, just to be able to live in our amazing East Bay. This all seems quite irrational, and indeed it is!
The low inventory continues to be caused by sellers choosing not to sell for a wide variety of reasons- they have a mortgage at 2.65 and can't sell and buy something better or to their liking in the same area without taking a huge financial hit. So the only sellers who are selling these homes are moving out of the area entirely, which is a fraction of the normal market demographic.
People are choosing to remain in their homes despite old age and ailments, and opting for home health care instead. I applaud this, as I think it is likely better for most older people to remain in familiar surroundings to keep mental acuity etc., but again, it means less inventory coming on the market. On the positive side, their wisdom stays in our community. They help create the beauty of diversity we experience here.
The news media keeps promulgating recession, even though at this point it doesn't seem like that is really going to happen. Monied people do not want to make serious moves in a potentially negatively volatile economy. Moreover, if they do sell, there is low inventory, so there is nothing to buy. This is an endlessly self-fulfilling cycle. On a positive side, it means that the financial stability of these people staying brings money into the city coffers.
Add to this the number of companies exhorting their staff to come back to work in the workplace. So, you have more people coming back to the East Bay, who had gone to live remotely- They want to buy, and again, there is nothing for them to purchase. Which in turn keeps prices going up and the transfer taxes on these large sales are great for our cities.
The rental market is also stagnant. because there is nothing to rent, but there is an affordability crisis in the purchase market underscored by the popular term "homeownership premium", because it is so much less affordable in our area to own rather than rent.
Yet, buyers really want to buy. They have resigned themselves to the new normal of these interest rates, and they actually do have the cash for large down payments. They are wanting to settle into a space, to feel the security that the feeling of homeownership brings. They have determined that although the price is high that it is worth it to live here. It is worth it to own a piece of the California dream, in one of the most beautiful, culturally vibrant, intellectually stimulating places in the world. They can envision the lives their children will have if they grow up here. Their financial sacrifice is worth it if it brings happiness, hope for the future and the ability to live out their dreams. In short, HOME really is where the heart is, and that completely transcends common sense and rationality- thank goodness.