The real estate market is constantly changing and shifting. This has been especially true over the past few years. The industry was surging during 2020 and 2021 as interest rates plummeted and buyers hit the market in droves to shop for homes for sale in Clovis, CA. Things have changed, buyer demand has cooled down, but homes are still selling rather quickly. What could this mean for the future of the market? This article will take a deeper look at what is currently happening and how these events could impact the market in the coming weeks and months.
1. The national market is headed for a recession
As buyer demand decreases, average sales prices are coming down. Some markets are being hit harder than others, but the common expectation is that the nationwide housing market will enter into a recession in 2023. There are varying beliefs about how significant the recession could be. Certain people believe that prices won’t fall very far, while others believe we could see a significant drop in prices. We recommend speaking with Todd Earnhart with The Fresno Market to better understand the market trends of Clovis, CA.2. What’s the cause of the recession?
The two main factors in play are higher interest rates and rapid inflation. In 2020, people were able to buy homes using loans with interest rates between two and three percent. Recently interest rates have risen above seven percent. The difference may not seem striking, but it translates to tens of thousands of dollars more over the loan's entire life. This is happening during a time when inflation rates are as high as they have been in forty years. People are already struggling to keep up with a rapidly rising cost of living, and it’s easy to see why they wouldn’t feel a strong sense of urgency to purchase a new home at a higher rate.3. Is the Clovis real estate market falling victim to this recession?
Average sales prices have been trending downwards in recent months in Clovis. There’s also been a drop in the average number of homes sold per month, and homes are spending more time on the market than they usually do. Despite these challenges, the market remains relatively competitive. Most homes sell within one month of listing and go for a final price close to asking. Many homes get multiple offers, and hot properties can go under contract within a matter of days after going on the market.4. When could we start to see things change?
It’s hard to predict when inflation and interest rates could begin to fall. Many are hopeful that the Federal Reserve will lower interest rates sometime during 2023, and there is evidence to suggest they will. Inflation will have to slow before taking this step, and nobody knows when that will happen. Some people will think about waiting to shop for a home until interest rates drop, but this is a risky game to play. There’s no telling how long you may have to wait, and prices could begin to rise again once interest rates come down as more buyers hit the market to shop for homes.5. Does the market change based on the season?
Yes, the market is usually hotter during the spring and summer. Sellers can sometimes list their property for thousands of dollars more when they sell their homes in April, May, and June. By this time, many people have received their tax refund checks and may use the extra money to help fund their down payment. Families with children are also more motivated to move during a time when they don’t have to worry about pulling their children out of school. Higher market activity continues through August before slowing down in September. October, November, and December are often the toughest months for sellers to earn top dollar for their homes. Don’t be surprised if you see the market pick up slightly in late spring or come down during fall or winter.6. What does this mean for buyers in 2023?
Buyers will benefit from shopping for homes during a time when competition isn’t as intense as in recent years. They can also capitalize on prices that are unlikely to rise far beyond where they currently are over the course of the next several months. If you’re thinking about buying a home in 2023, talking with a lender is a great first step. Your lender will help you get a pre-approval letter that you’ll likely need to have before you can begin working with a realtor and shopping for homes. Keep in mind that different lenders will offer different interest rates, so don’t be afraid to shop around and see which group or bank can give you the best rate.
