March 2023 is in the books so I’m here to tell you exactly how the real estate market performed in the first quarter of 2023, and what we might expect to see as the year goes on! Some of these stats completely shocked me, so if you’re thinking of buying or selling you’re going to want to see this! Let’s go!
Any questions? Reach out to me directly by email at Kyle@SoldByKyleWinn.com or by call or text at 951-852-9980.
Hey everybody, it's your friend, Kyle Winn, and if you’ve never seen my videos I am your real estate expert here in Southern California, specifically Southwest Riverside County. I help people buy, sell and invest in real estate here in Southern California. The real estate market was wild in 2022, but today we’re going to see how it performed in the first quarter of 2023! Now real estate is always a popular topic in the news, and you’ll often find conflicting reports, so let’s cut through all that and see what’s happening here at home in Riverside County!
The number of new listings that hit the market has been pretty constant month over month this year so far at an average of just 2700 homes per month in the first quarter of 2023. Now you may have been hearing that there are not many new listings coming to the market, and this is true here in Riverside County as we usually average around 4000 homes per month in the first quarter of the year. This tells us that we don’t have many people looking to sell their home at the moment, but the number of new listings tends to hit an annual high between April and June, so expect to see an increase in new listings over the next few months.
The number of monthly closed sales tends to bottom out for the year in January, which was the case this year at about 1550, but since then that has been on a steep upward trajectory with over 2500 closed sales in March. For this time of year we would typically expect to see over 3000 sales per month, so sales are down 15% to 20% from where we would expect them to be. However, I want you to compare this to what I just told you about the number of new listings. During the first quarter the number of new listings stayed pretty constant month over month, but the number of closed sales is increasing by about 25% month over month! So what does that mean? Let’s find out!
Let’s talk about months’ supply, which is how long it would take to sell all the properties that are currently listed if no new listings came on the market. This metric is a key indicator of whether we’re in a seller’s market, a neutral market, or a buyer’s market. We say a seller’s market is when the month’s supply is less than 3 months, a neutral market is 3 to 5 months, and above that we’re in buyer’s market. In Riverside County the months’ supply was 2.7 months at the beginning of the year, which dropped to 2.5 months by the end of the first quarter. Since the number of new listings stayed pretty constant during this time, but the number of closed sales increased significantly, it makes sense that the months’ supply decreased over that period since we now have less supply with higher demand.
Overall we are still in a seller’s market, and if the months’ supply continues to decrease we may cement ourselves in a seller’s market for some time. Inventory is low so buyers don’t have too many homes to choose from at the moment, and even though we’ve seen a slight increase in buyer demand lately there are far fewer buyers in the market compared to the last couple years making it easier for buyers to secure a home today without bidding against a bunch of other offers. Now for you sellers out there even though it is considered a seller’s market, don’t get too excited thinking you can list your house and get dozens of offers the first day. I just told you there are fewer buyers out there compared to the buying frenzy of 2020 and 2021… so let’s see what it takes to successfully sell a house today.
One metric we use to understand the current market is the median number of days on market. This was at 42 days in January, which increased to 44 days in February, and then BOOM it dropped to 31 days in March. I’m sure you’ve heard plenty of people complaining that “nobody is buying homes because interest rates are too high, who can afford it, and whatever else,” but I just told you that homes are now selling 13 days faster than just one month ago. This is the start of the hyperactive springtime market we typically see every year. Now this is great news for sellers and even more evidence that we are in a seller’s market, but for you buyers out there if this trend continues it could get very difficult to successfully purchase a home with so many other eager buyers out in the marketplace. Do you remember people trying to buy a home in 2021 and early 2022 when buyers were outbid on every house by a dozen other offers? Well that’s when the median number of days on market was less than 10 days, and if this drastic decline continues we could find ourselves there again in a couple months.
If you’ve seen any of my other market update videos, you’ve heard me say that the average sale price tends to bottom out some time in the last few months of the year, and then starts to increase again in the first part of the new year. This year was no exception as the average sale price bottomed out in December at almost $608,000 and since then has steadily increased to over $654,000 in March, which is the highest it has been since June of 2022! The average sale price in Riverside County hit an all time record of $711,000 in April of 2022, but now at about $654,000 the average sale price is still higher than any time before 2022. It’s a great time for you homeowners thinking about selling since values are higher than any time before 2022 and they seem to be on the way up again as we head into the busy springtime market. Plus you want to keep in mind that every year the average sales price tends to peak between April and June, and knowing that the median number of days on market is now at 31 days you should consider listing your home for sale in the month of April, which means you should be calling your favorite Realtor right now in order to maximize your proceeds here in 2023.
One topic we see in the news every day is mortgage interest rates. During the first quarter of 2023 the interest rates for a 30 year fixed rate mortgage hovered around the mid 6 percent range. I know this number looks scary to some of you thinking about buying a home, especially when your friends got an interest rate in the 2’s and 3’s a year or two ago, but I would really encourage you to reach out to me and I will show you many ways to help you afford to make that move. I honestly think this is the best time for buyers to shop for a home than any time in the last 3 years. As a buyer today you have less buyers to compete against although buyer activity is increasing again, homes are 5-10% cheaper than they were just one year ago, you don’t have to bid above appraised value and waive all of your contingencies just to get an offer accepted, and if you’re considering a new home so many builders are still offering amazing incentives like discounted interest rates, free upgrades, free solar panels, closing cost credits, and more.
Well I'm going to keep studying the market here in Riverside County and I'll continue to deliver updates for you. If you are thinking of buying or selling please call, text or email me today. Until I hear from you I suggest you keep an eye on these stats we discussed today to give you an idea of where the market may be heading, but if you don’t want to take the time to go study all this stuff, just follow me so you never miss my monthly market updates. Well that wraps up my Q1 2023 market update!