Homebuyers and sellers in Pleasanton are balancing concerns about rising inflation and mortgage interest rates against more homes on the market and pricetags that are becoming more realistic.
During the first few weeks of 2023, the Pleasanton real estate market continued feeling the effects from the major shifts that began during spring 2022.
"Buyers this year may be more conservative because they are more concerned about their jobs and housing affordability," said Jennifer Branchini, 2023 president of the California Association of Realtors. Branchini, who is also a Pleasanton resident and Pleasanton-based Realtor, has a unique perspective on real estate markets given her local connection while also leading a trade association of more than 200,000 Realtors.
Branchini explained even cautious homebuyers are still motivated. "While interest rates are higher than where they were a year ago, we've also seen prices come down in relation to the cost of money," she said.
She suggested buyers need to balance higher interest rates compared to this time a year ago with where they will be in the future, saying, "Buyers need to consider if the home they are going to buy now will be their home in seven to 10 years, is it a long-term investment for them?"
Branchini said a new type of buyer is emerging in Pleasanton following years of being sidelined.
"Another trend is that we're starting to see 'move-up' buyers who currently live in the Tri-Valley and are outgrowing the home that they are in and need a bigger home," Branchini said.
In previous years, Branchini said "move up" buyers had two options: look beyond the Tri-Valley or put their plans on hold and not move. "They couldn't compete because they would have to sell their home first before they could buy something," she said.
Branchini continued, "Because of where the market has been, I think there's a bit of an opportunity for people in Pleasanton to say, 'I'm ready to sell my condo, I'm ready to sell that first house' and buy the bigger house, and now they might have a shot at doing it in Pleasanton."
The desire to make a change is beginning to outweigh the low monthly mortgage payment buyers may currently enjoy. Branchini said, "Even though they may have a 3% interest rate now, they're saying, 'We can't stay here for the 30 years we're locked in on this interest rate; we have to make a decision and make a move.'"
Sellers are also responding to changing real estate and general economic conditions.
"People are feeling the pressures of inflation and the cost of living and high energy bills and are making decisions to sell their homes, put that equity in the bank, and simplify their lives in advance of making a bigger move," Branchini said. These sellers are opting to rent in the Tri-Valley while they plan their next step.
Asked what may be motivating current homeowners in Pleasanton to make a change, Branchini said, "It depends on where they are in their life. If there are people who are approaching retirement, this may be the time when they opt to make the move when they thought they might do it in five years."
Market conditions during January 2023 were initially promising for buyers compared to January 2022 -- more choices, lower prices and homes on the market longer. However, Branchini emphasized that 2022 was an unusual year as low interest rates and historically low inventory during the first quarter super-charged both prices and sales activity.
Branchini said some balance between buyers and sellers may be happening, yet the fundamental difference between supply and demand in Pleasanton is still a reality.
"We only have so many homes on the market, and we have a high buyer demand again," she said. "Homes are not sitting on the market unless they were significantly overpriced."
She emphasized that buyers and sellers in Pleasanton need to focus on local conditions rather than regional, statewide or national trends.
"Real estate is super-local, and buyers need to pay attention to the inventory that's on the market," Branchini said. "We are starting the year with very low inventory and if we don't see the spring market perk up, we're definitely going to be in a sellers' market."
Editor's note: David Stark is chief public affairs and communications officer for the Bay East Association of Realtors, based in Pleasanton.