Has the real estate market passed the bottom or is this a ‘dead cat bounce’?
I bet that headline caught your attention! It appears 2023 is already a year that will force me to expand my vocabulary! Last week I shared the term “fun-sizing.” This week I learned the term/meaning of a ‘dead cat bounce’ coined by Raymond DeVoe Jr. According to Investopedia, a ‘dead cat bounce’ is a temporary, short-lived recovery of asset prices from a prolonged decline or bear market that is followed by the continuation of the downtrend.”
Robert Reffkin, our COMPASS CEO, shared his optimism for today’s real estate market. According to Robert, there are six reasons why he believes Q4 of 2022 was the bottom of the recent real estate market cycle:
- 25% Increase in weekly mortgage applications.
- Mortgage rates continue to move down to a 4-month low.
- Increase in buyer interest, open house traffic, and offers.
- In the last quarter of 2022, 42% of sellers were giving concessions to buyers at the closing table, a 10-year high.
- Home builder sentiment improved for the first time in 1 year.
- Pending closings were down 30+% at points in the fall, but over the last few weeks, we have seen pending listings in most of our markets nearly flat year-over-year.
Our team is also seeing a marked uptick in terms of buyers entering or re-entering the marketplace. We are also feeling the pain of very low inventory. As I am writing this, there are:
- 3 Detached homes on the market in Moraga
- 25 Detached homes available in Lafayette
- 18 Detached homes available in Orinda
Inventory in the month of January is down -24% over January of 2022!
Our first two listings of the year lasted on the market for less than 2 days, and both of our buyer’s agents have buyers who were ready and able to get their offers accepted last week. Our listings were priced correctly and presented beautifully with our in-house Tailored House Staging. In our opinion, there was no advantage to the buyer or the seller. Both sales are a win-win for both parties. Our buyers are also in fair contracts.
This is the market that we believe will prevail until the next positive or negative bounce happens. In our opinion, it is too early to determine if this activity is a result of pent-up buyer demand, improved interest rates, low inventory, or a ‘dead cat bounce.’
Regardless, we do believe prices have adjusted in Lamorinda and that if you live in the ‘land of reason,’ it is a good time to buy and sell. By the way, when I discussed the ‘land of reason’ for the first time last year, I had no idea how often and how long I would refer to it. For now, it is clearly here to stay!
Dana & Team