Leaning into Market Headwinds, Year-over-Year Appreciation Rate Falls
The impacts of this year’s severe economic headwinds – soaring inflation and interest rates, stock market declines, fears of recession – on Bay Area real estate markets are speeding up. The first effect was on buyer demand (fewer buyers, offers and listings into contract), leading to changes in supply (more homes for sale, more price reductions), which began to alter buyer and seller psychology and the balance of power between them. Especially after one of the longest, most dramatic upcycles in history, the psychology, circumstances and plans of individual buyers and sellers shift unevenly in the early months of a transition as they try to make sense of changing market realities. Eventually statistics based on closed sales – prices, appreciation rates, overbidding, days on market – slowly start to adjust. Generally speaking, closed sales are lagging indicators of what occurred in the economy and market weeks and months earlier.
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