The San Jose real estate market in February 2023 continues to be a hot topic for discussion. There is no doubt that the market is still skewed heavily in favor of sellers, with less than 2 months of inventory on hand. However, there are some signs of change that are worth exploring further.
Inventory Grows – but more slowly.
The San Jose real estate market saw a 2.9% increase in inventory when compared to the same time last year. This was the lowest growth in the southern Silicon Valley area for this month. This is a dramatic change from last month when the inventory was up 37% compared to the same time last year. Inventory continues to be the driving force in the local markets. Interestingly, the San Jose real estate market currently only has 1.5 months worth of inventory on hand. If we were only looking at that statistic, we would assume we are in a strong seller’s market. Market balance is usually considered to be 3.5-4.5 months of inventory. Given that, it becomes clear that it would take a very minor increase in buyer activity to flip this market strongly toward sellers.
New Listings Down.
New listings are down compared to the same time last year – so fewer sellers are willing to put their home on the market. With a 40% drop in new listings – and a drop in the number of homes sold, San Jose added just 175 homes to the market. This is a significant change from last month when we saw a 20% increase in new listings compared to the same time last year. It is clear that sellers are becoming more cautious about putting their homes on the market, and this is affecting the overall inventory levels.
Homes Sold.
The San Jose real estate market saw a drop of 34% of homes sold when comparing to the same time last year. This is a significant change from last month when we saw a 16% increase in homes sold compared to the same time last year. This drop in homes sold is likely due to the lack of inventory on the market, which is making it difficult for buyers to find the right home.
Homes Pending/Contingent.
This month, the number of homes that went into a contract for sale declined by 37% when compared to the same time last year. That gave us 415 sellers that accepted an offer on their home. Keep an eye out for homes sold numbers next month to see how many of them actually ended up closing escrow and resulting in a sold home. This is a crucial metric to watch, as it can give us a better idea of how the market is performing in terms of actual sales.
List Price.
Sellers continue to expect to get more for their homes than they did last year. The average home list price was up 6.3% compared to the same time last year. This is up from last month’s 4.9% increase in what sellers were expecting to get for their home. This is a clear indication that sellers are still feeling confident about the market and are willing to price their homes accordingly.
Sales Price.
While seller expectations increased over the year, actual sales prices decreased by 17.7% over the year. The good news is that sellers in the San Jose real estate market seem to be getting better calibrated to the correct market values in today’s values. However, given that big drop in average sales price, there is clearly more to be done here. Sellers need to be more realistic about the prices they are asking for their homes, especially in a market where there is such a low inventory.
Percent Of List Price.
Sellers have been seeing their homes sell for 101% of asking price – down from 114.8% at the same time last year. This marks the first month since September when sellers are getting their asking price on average.
Days On Market.
It is taking 191% longer for home to sell in this month than at the same time last year. That comes to 32 days this year and just 11 days during the same month last year.
Price Reductions.
In February 2023, 20% of homes in the San Jose real estate market had their price reduced. As more sellers calibrate to the new market levels, we can expect more homes on the market to reduce their homes asking price. We will see this number drop was we see the number of property priced homes listed for sale.
Market Outlook.
Overall, the San Jose real estate market in February 2023 is showing signs of slowing down after a period of frenzied activity. Inventory is growing but at a much slower pace than before, and new listings are down. Homes are taking longer to sell, and there are fewer buyers in the market. However, sellers continue to expect high prices for their homes, despite the drop in actual sales prices.
The San Jose real estate market is currently in a state of transition, as buyers and sellers adjust to the new normal after a period of rapid growth. While the market is still fairly strong for sellers, it is at a point where a relatively small change in buyers habits could push us back into a seller dominated market place.
For buyers, this may be a good time to enter the market, as there is less competition and sellers may be more willing to negotiate on price. However, buyers should be prepared to act quickly when they find a home they like, as homes that are more desirable are selling relatively quickly and with the low months of inventory, the market could flip quickly back into a world where multiple offers are here again.
For sellers, it is important to be realistic about the value of their homes and to price them accordingly. While the San Jose real estate market is still strong, it is no longer the seller’s market it was a year ago. Pricing a home too high can lead to it sitting on the market for longer than necessary, which can result in a lower final sales price.
The San Jose real estate market in February 2023 continues to be strong for buyers, but there are signs that the market is at a point where a small change could flip the story. Inventory is growing, new listings are down, and homes are taking longer to sell. Buyers may find opportunities in this market, but they should be prepared to act quickly when they find a home they like. Sellers should be realistic about the value of their homes and price them accordingly. As the market continues to adjust to the new normal, it is likely we will head into a more balanced market, but only time will tell.
Source: All data is extracted from the MLS system for Santa Clara County – mlslisting.com
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