Monthly report · No.10
TUESDAY, JANUARY 7, 2025
HAPPY NEW YEAR!
We’re excited to be finally out of the holiday fog, you know, that weird time at the end of the year where it’s easy to lose track of what day it is. As much as we need rest to recover, and as much as we need down time to celebrate the goodness of life, “even the comfiest chair gets uncomfortable after too long”. We’ve rested, we’ve celebrated, we’ve recovered, and now we’re back and ready for the New Year! How can we assist you?...........😊
the state of the market
The Housing Factor
By Ehsan Habib
The data for December 2024 reveals that it was the month with the third lowest number of transactions for the year (Jan and Feb being the lowest and second lowest, respectively). This is in line with seasonal expectations. The winter months always see the lowest level of activity. Taking a look at the bigger picture, we see signs that the local housing market is continuing to stabilize. Since Q2 of 2022, when interest rates made their BIG jump, we’ve seen the housing market slow down: Lower inventory, fewer sales, and a general decline in values. 2023 saw the fewest number of sales in our market since 1997 (when data began to be tracked digitally). 2024 saw an increase in sales over 2023 but only by about 7%, putting it in second place since 1997 in terms of lowest number of transactions (with 2007 taking 3rd place honors).
During the past 2 ½ years, in a higher interest rate environment, buyer demand has been less robust than normal which has benefitted those buyers willing to make a purchase.
Generally speaking, the decrease in demand has led to a steady decrease in the “absorption rate” of housing inventory - i.e., how quickly buyer demand is absorbing the homes for sale. The Inner East Bay Area, like the rest of the Bay Area, is fundamentally a tight market (lots of competition for not enough homes) - but since 2023, we have seen our absorption rate weaken to levels not seen since 2013. September 2024 was the lowest point in the absorption rate since 2011. This imbalance has led to an overall softening of prices - the median single family home price in the Inner East Bay declined by 9.8% from 2022 to the end of 2023, and a further 2.17% from 2023 to the end of 2024.
What can we expect from 2025? Nationally, contrary to what we’ve experienced in our local market, home prices have increased year-over-year since 2022. Our local market is returning to a state of equilibrium though, and without any significant change to the larger economic picture (interest rates, the job market, and inflation), we expect to see more inventory than 2024, and we anticipate that buyer demand will rise to meet it. We anticipate that mortgage interest rates will fluctuate from the low to high 6% range. If rates go over 7% demand will slack, and if they fall below 6% demand will increase and the market will heat up.
Large unexpected events affecting the global economy could always lead to the housing market getting tougher. Trump has promised to increase tariffs on Canada and Mexico by 25%, with even larger tariffs on Chinese goods. These actions, should they come to pass, could reignite inflation and, consequently, interest rates.
Market conditions are continuously changing. At The Home Factor we are constantly tracking and analyzing market data. If you are not currently receiving our Weekend Blog, we encourage you to check it out www.TheHomeFactor.com. You can subscribe by reaching out to us. If you would like to discuss market conditions and how they affect your specific circumstances or neighborhood, please do reach out as we’re always happy to hear from you. And, as ever, we invite you to share this important information with family and friends and to make them aware of our services so that they can get hyper-local answers to hyper-local questions.
*Data is sourced from the MLS and considers detached Single-Family Homes
Mortgage news
MORTGAGE MUSINGS
By Evelyn Freitas | VP of Mortgage Lending at Guaranteed Rate NMLS 247578
Homeownership: The Key To Building Wealth
Welcome to 2025! May it be happy and prosperous. Speaking of prosperity, did you know that homeowners in America are sitting on significantly more wealth than renters? A recent study revealed that, on average, homeowners have over 40 times the net worth of renters, thanks to one factor: home equity. When you own a home, every mortgage payment you make builds equity. The rise in property values over time grows your equity even more. This equity can be a powerful financial tool, providing options like funding a renovation, starting a business, or even helping with college tuition or retirement. If you sell the property, the accumulated equity will be converted to cash in your pocket at closing. In contrast, renters are paying to build their landlord’s equity, with no return on their monthly payments. While renting may seem more flexible in the short term, it doesn’t provide the long-term financial benefits of homeownership. This is encouraging news if you own a home, or if you’ve been thinking about becoming a homeowner. Whether you’re buying your first home or looking to tap into your equity to upgrade, now is a great time to explore your options for building wealth through real estate.
If you have mortgage questions, email me at Evelyn.freitas@rate.com and let’s talk. I would love to help you achieve your real estate goals in 2025 and beyond.
We are The Home Factor, REALTORS®, serving clients in the San Francisco Bay Area, and beyond.
Declan Spring · Declan@thehomefactor.com
(415) 446-8591 · DRE#01398898
Denitsa Shopova · Denitsa@thehomefactor.com
(510) 220-1634 · DRE#02137852
Ehsan Habib · Ehsan@thehomefactor.com
(510) 730-4516 · DRE#02166899
GUIDING AND INSPIRING PEOPLE TO INCREASE THEIR FINANCIAL STABILITY AND LOVE OF LIFE THROUGH WELL DESIGNED HOME OWNERSHIP
The Home Factor • DRE#01398898 • Powered by Keller Willams • 2089 Rose St, Berkeley, CA 94709 • Declan@TheHomeFactor.com · (415) 446-8591