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More homes on the market and rising interest rates have changed the homebuying experience in Pleasanton. However, real estate experts are reluctant to announce we are in a buyer’s market.
“I don’t ever use terms like buyer’s or seller’s market because it just depends on what your goals are and your timeline,” said Jordan Levine, vice president and chief economist for the California Association of Realtors. “When people ask me if this is a good time to buy, I always turn around and ask more questions: How long will you own the house? Do you like the house? Can you afford the house?”
Levine said there are conflicting economic forces influencing buyer behavior: “On one hand, we’re in a period of heightened economic uncertainty, that could be a strike against buying a home. On the other hand, we have a market that’s a lot less competitive than it used to be and that’s a positive for someone who wants to buy a home.”
He continued, “Mortgage interest rates are higher and that’s a negative, but rates are probably going to go higher in the future and that’s a vote in favor of buying now. Those are all considerations you want to think about.”
Asked how much power homebuyers in Pleasanton have, Sheila Cunha, 2022 president of the Bay East Association of Realtors, said, “It depends on the house. If the house is totally renovated and fixed up, I don’t think they have a whole lot of control because people want to move into a house that’s ready for them, and in Pleasanton you don’t see a lot of fixer-uppers.”
The median sales price for a single-family detached home in Pleasanton dropped from more than $2 million during March to $1.6 million during September. Sales prices were approximately $20,000 more than September 2021.
Cunha observed that even if it is not necessarily a buyer’s market, sellers do need to pay attention to shifting conditions.
“I do think a seller has to be more realistic about the price because sellers have seen appreciation since the pandemic of over 40% or higher in some areas,” Cunha said. “They’ve had a lot of appreciation but it’s not going to continue, they need to be very realistic about prices.”
Cunha’s advice for sellers is to price their home “attractively, so they can get the most eyeballs on it and you always want to stage it. Even if the sellers have their own furniture, get a professional in there to advise you what to do.”
Major changes in both supply and demand have brought prices down. On the supply side, there were 22 homes for sale in Pleasanton during September 2021 compared with 80 during September 2022.
The dramatic increase in supply is changing more than sales prices. “In places like the Bay Area that has been so incredibly inventory-constrained, buyers will have a different experience just because there are more homes to look at and they’re not flying off the shelves as fast as they used to,” Levine said.
“People who didn’t have all-cash or 20% down were having a rough time over the couple of years and now those folks have some options to get their foot on the property ladder and that’s a big change,” Levine added.
On the demand side of local real estate economics, concerns about rising interest rates and prices that are still out of touch for many buyers have both had a chilling effect. A home was on the market for an average of 14 days during September 2021 compared with 30 days during September 2022.
“Buyers are going to have a lot longer conversation when they are buying than what they are used to. ‘How much money will I have to pay?’ was really the only question a buyer could ask during the last couple of years and now I think they can start to negotiate again. We’ve heard of sellers reducing prices, helping with down payments or closing costs,” Levine said.
Cunha agreed, “Asking a seller for assistance with closing costs is probably a reality that hasn’t happened during the last 10 years, and if inspections have been done and things need to be fixed, a buyer can ask for those repairs.”
Both Cunha and Levine acknowledged interest rates that have doubled during the last few months are top-of-mind with homebuyers yet should not be the only factor when home shopping.
Cunha said, “If I’m a buyer right now, I’m looking for a house I really want to buy because I’m going to marry the house, not the interest rate. I know I can address interest rates later should they come down.”
Levin said, “From a long-term standpoint, it absolutely makes sense to buy a house right now because you don’t have to fight past so many other buyers and the long-term appreciation is unblemished by the current challenges that we’re facing. If you’re buying a house to hold, raise your kids, etc., it’s a great time to buy. If rates go down in the future, you can always refinance and get your payment down even lower.”
Editor’s note: David Stark is chief public affairs and communications officer for the Bay East Association of Realtors, based in Pleasanton.
