Ken's copy July 2023 Marin Market Report

Underlying market and economic dynamics in 2023 have been a distinctly mixed bag of often contrary and volatile factors – including downward-trending inflation; interest rates bouncing between 6% and 7%; unceasing uncertainty regarding what the Fed will do next; stock markets seeing substantial rebounds; bank, commercial real estate and debt-default crises; international political, economic and military conflicts; high-tech layoffs amid generally strong employment statistics; and a robust recovery in buyer demand, sales activity and home prices, but all 3 remaining significantly lower than the peak of the market in spring 2022. Perhaps the biggest wild card has been severely depressed new-listing activity as potential sellers have held back – ascribed to the “mortgage lock-in effect” – which has not only artificially constrained the number of sales, but put upward pressure on prices as buyers, once again, competed for an inadequate supply of homes for sale.

Ultimately, the market is defined by neither just demand nor supply, but by the balance between the two. As we’ve gotten deeper into 2023, that balance has tilted increasingly to sellers’ advantage, with homes selling faster, with more offers, for higher prices. Part of this is due to seasonal dynamics – spring is commonly the highest-demand, most active selling season of the year – but the contrast with the 2nd half of 2022, when demand and sales plunged, is more than seasonal.  It also reflects a rebound in psychology, with many buyers clearly deciding to move forward with their life plans.

For most Bay Area markets, summer has historically been a slower period after spring – with some regions seeing a relatively short (6 to 8 weeks) spike up in activity in autumn before the midwinter-holiday slowdown – but typical seasonal trends have been upended a few times in recent years. Certainly, a substantial amount of buying and selling will continue to occur in the coming months, as well as continuing changes in underlying economic conditions, which I will cover in detail in future reports.