Market Trends August 2023

106 Homes sold in August 2023 down from 133 homes sold this time last year. Low inventory continues to drive sales. 40% of homes sold in southern Santa Barbara were “all cash.” Although the market has softened slightly here in September there’s a strong possibility that the market will pick up as we head into October and November.

If you’re a serious buyer in this market make sure you’re pre-approved or are prepared to provide verification of funds if you’re considering making an offer.

SOLD LISTINGS FOR HOMES AND ESTATES AUGUST 2023 SOURCE: SBAOR MLS

SOLD LISTINGS FOR CONDOMINIUMS, TOWNHOMES, AND PUDs SOURCE: SBAOR MLS

Home sales in California had another soft month in August as interest rates surged to the highest level in 22 years late last month before calming down slightly in the past two weeks. Home prices continue to recover, nevertheless, with the California median price gaining year-over-year for the second straight month. Tight supply remained the primary factor that prevented prices from falling, and new listings have been shrinking for more than a year already.

Housing shortage also has been keeping sales down and the situation may get worse before it gets better. With retail activity staying solid and core inflation not cooling fast enough, rates are not expected to retreat meaningfully in the next couple of weeks.

Home sales will likely have another slow month in September but could bounce back in October and November, as signs of slower economic growth in recent weeks suggest lower mortgage rates could be forthcoming in Q4 2023.   

CoreLogic’s Home Price Index showed that home prices nationwide rose for the sixth straight month, up 0.4% from June to July. Prices were also 2.5% higher when compared to July of last year. CoreLogic forecasts that home prices will rise 0.4% in August and 3.5% in the year going forward, though their forecasts tend to be on the conservative side historically. In fact, CoreLogic’s index is on pace for just under 9% appreciation in 2023, based on the monthly gains we’ve seen so far this year.

What’s the bottom line? The latest rise in home prices reported by CoreLogic and Zillow echoes the strong growth seen by Case-Shiller, Black Knight, and the Federal Housing Finance Agency. These reports continue to demonstrate why homeownership remains a good investment and opportunity for building wealth through real estate.