Wrapping up the slowest sales year in more than a decade, the western Nevada County real estate market put a bow — a surprisingly pretty one — on 2023 with a nearly 40% increase of homes sold in December.
The 102 transactions that closed reflect a 39.7% spike over the 73 sold the prior month and ensured 2023 went out with a bang, after a year that saw local home sales stumble out of the gate and fall short of year-over-year monthly sales comparisons in 10 of 12 months, one of the exceptions being December.
Multiple Listing Service data shows the total annual sales of 1,146 homes were down 23% from 2022, marking the second straight year of declining sales after the white hot sales markets of 2020-2021 that saw the most residential transactions in two decades and produced record local median prices.
The frenetic pace of those sales helped to deplete inventory to the point the local market has yet to return to typical number of homes listed for sale prior to the pandemic. Coupling that with climbing interest rates that have potential sellers — and buyers — pumping the brakes before giving up record-low interest rates of the Covid-era has meant lower inventory and higher prices — despite the considerable decline in demand from that stretch of frenzied sales.
A single month doesn’t establish a trend, but the December spike in sales might offer a bit of optimism that 2024 will get off to a stronger start than the year before.
HOMES SOLD
Local home sales lagged behind prior year throughout 2023, but the stage was set with the worst first-quarter sales in eight years. A total of 221 homes were sold in the first three months of 2023 in western Nevada County.
That’s the fewest sold since the first quarter of 2016, when 249 homes sold, and 36.1% fewer than the number sold in the first quarter of 2022.
Along with higher interest rates, western county was buried in snow or washed out by rain storms for the better part of 2023’s first quarter. Adding to that mix, a low number of homes on the market left buyers with fewer choices in that time frame, also a similar story statewide.
As the weather warmed up, so did home sales — once the market slogged through spring and into the summer heat. Monthly homes sales almost didn’t top triple digits before local temperatures did the same, totaling 127 homes sold in June — the highest single month of sales in 2023 and a 34.7% increase over May sales, but still down 18% from the same month in 2022.
In each of the previous four years, sales warmed up enough to hit that monthly threshold by March.
The next five months of sales stabilized, topping the century mark each month from June through October — before a 27% drop in monthly sales left a total of 73 homes sold in November ahead of December’s surprisingly strong sales to close out the year.
PRICE POINTS
No question there are myriad reasons for the slow sales of 2023, with a low inventory offering fewer options for buyers and also helping to prop up prices. Throw in higher interest rates and area real estate agents felt like they were in stop-and-go traffic, with buyers and sellers both backing off a bit looking for lower rates around the corner.
According to MLS data, the median price of a home sold last month in western Nevada County was $527,250.
Prior to the pandemic, in January of 2020, the median price was $418,000.
Twelve months later, in the thick of the frenzied pace of sales, the median had climbed to $525,000.
In April 2022, price points reached a local record high median price of $592,500. Though prices have come down as the market has cooled, 20 months later December’s median price was just 11% lower than the local all-time high.
Because of the limited options available with lower than normal inventory, buyers sometimes find themselves in a competitive offer even though the pace of sales has significantly slowed over the past two years.
Prior to the pandemic, summer months often saw western county with 500 to 600 homes on the market. The most homes on the market in any single month of 2023 was the 360 listed in June, as local listings continue to languish far below pre-pandemic norms.
RATING INTEREST
Low inventory can lead to lower demand, particularly during winter months as prospective buyers keep an eye out for new listings while looking to weeks ahead when more homes come onto market. But it is climbing interest rates over the past 18 months largely behind the significant slowing of sales.
And although current rates are historically average, the 6.5% percent of 2024 feels a bit different from that same rate in 2008. That’s because it’s on the heels of the record low 2-3% rates of 2020-2021, as opposed to coming down from much historically higher interest rates.
“The average rate on the 30-year fixed has been on a wild ride since the start of the Covid pandemic,” CNBC reported Monday. “It hit more than a dozen record lows in 2020 and 2021, below 3%, causing a historic run on homebuying and a sharp rise in prices, only to then more than double in 2022.
“Rates hit a more than 20-year high in October 2023, hovering around 8% before falling back below 7% in December. Rates, however, are still twice what they were three years ago.”
When interest rates shot above 5% in the spring of 2022, sales downshifted and cooled considerably in the following months, and eventually into the following year, with 2023’s pace plodding along to the lowest sales volume since 2010.
Rates have come down in recent weeks, as Freddie Mac reported a 30-year fixed rate mortgage of 6.61% to close out 2023, the second consecutive month it reported a lower rate. On Jan. 11, a 6.66% rate was recorded.
LOOKING AHEAD
Although December’s surge in sales closed out 2023 with confidence, the first quarter of 2024 might prove as telling as it did a year ago. Strong sales out of the gate, building on December’s bump, could build confidence in both buyers and sellers. Whether that will be the case remains to be seen, considering although sales spiked nearly 40%, pending sales dropped 28.2% to close out the year with 94, the least monthly number in escrow since February.
And the prior month, November, recorded the fewest monthly sales since February.
According to the California Association of Realtors, a similar story is playing out across the Golden State.
“While sales have been weak for the past several months, a tight supply of homes for sale is keeping home prices from falling,” said association Senior Vice President and Chief Economist Jordan Levine. “Going into 2024, the recent decline in mortgage rates, along with the upward momentum in home prices, could motivate more would-be sellers to list their homes for sale in the spring homebuying season.”
Brian Hamilton is a Realtor (DRE #02149112) for the Betsy Hamilton Real Estate Team at RE/MAX Gold (DRE #01949144) in Grass Valley. Email him at Brian@BetsyHamilton.com or visit www.BetsyHamilton.com for more information.
- BY THE NUMBERS
- December home sales in western Nevada County:
- $527,500— Median price (2023)
- $499,000 — Median price (2022)
- 41 – Days on market (2023)
- 33 – Days on market (2022)
- 102– Homes sold (2023)
- 87 – Homes sold (2022)
- 237 – Homes for sale (2023)
- 234 – Homes for sale (2022)
