The average 30-year rate jumped from 3.22% in January to a high of 7.08% at the end of October according to Freddie Mac’s records. As of December 24, 2022, they’re back down a bit to 6.27%. This huge shift in rates certainly affected the 2022 real estate market. The first half of was much like the past two years: low interest rates, low housing inventory, and lots of buyers competing for the same homes. This resulted in buyers giving up a lot of negotiating power. Buyers were paying over list price – sometimes hundreds of thousands over and waiving other contingencies that are typically standard in a real estate transaction – just to get into a home. Things started to shift at the beginning of July. Interest rates jumped, and a lot of buyers saw both their purchasing power and morale diminish and decided to pause their searches. Homes that were previously receiving 20+ offers started to receive two or three; still enough to allow the negotiating power to lie with the sellers, but not enough to result in the crazy overbids we saw earlier in the year. Are we heading into a buyer’s market? Or simply a balanced market? The numbers would suggest a more balanced market, one in which both sellers and buyers will compromise a bit for a mutually successful transaction. Most of my clients know that I work all over southern California, but for the below analysis, I’ve focused on Sherman Oaks and Studio City. The numbers for sales vs list price and days on market are consistent throughout the southland. Since some of the July sales include homes that were listed when things were still a little hotter, I also included Q4 numbers to show the trends.
Average Sales PriceAverage Sales vs
| Avg. Sales Price | Ave Sales vs List Price | Average Days on Market | Average Price Per Square Foot |
Jan-Jun 2022 | $2,298,432 | 106% | 20 | $879 |
July-Dec 2022 | $2,205,668 | 100.15% | 26 | $852 |
Oct-Dec 2022 | $2,246,876 | 99% | 30 | $845 |
Source: The MLS
Homes are selling for closer to the list price and staying on the market a little longer. While things are trending down slightly, the changes are not drastic, and experts don’t expect a crash. A balanced market really is better for both parties, and it is still a good time to buy or sell. Buyers don’t have to “panic” purchase, they can retain some of their negotiating power. Sellers can still expect to get a fair market price if they are realistic about their home’s value and willing to be a little more flexible during the negotiation process.
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