Where is Talega Headed?
Being the top realtor in San Clemente, I get asked on a daily basis a lot of questions about real estate, the most common one being: How is the market? My answer is that overall our real estate market is healthy and stable. Other commonly asked questions include:
- Have we seen prices on some Talega homes drop since last year? Yes.
- Have we seen prices increase since last year? Most definitely.
- Are interest rates affecting buyers? Yes, for those that need a loan.
- Has our inventory exploded where buyers have lots of choices when looking? Absolutely not.
- Are there still buyers looking? Yes, but about 60% less than in our peak of 2022-2023.
- Will my home be worth more next year? Probably.
- Is this market going to drastically change anytime soon? Probably not, so buckle in for a boring and stable 2023.
Right now there are lots of factors influencing our Talega market and where we both are and headed. Coming off of years of low interest rates, homeowners that currently have a loan are locked in somewhere between 2-3.5%. Thus they are content where they are living and comfortable with their housing cost. They did not panic when the market shifted last year and can weather a longer storm staying in their homes. This factor is causing low inventory resulting in buyers having fewer choices.
I often hear “Interest rates are so high, no one must be buying right?” That is wrong as there is always a buyer pool in any market. Buyers are electing to pay cash, variable loans are popular and some are just moving equity from one house to another holding a small loan. Yes, there are a lot less buyers in the market than previous years but there is still a steady stream of buyers coming to Talega and San Clemente.
This year, our Active inventory has been hovering around 84 homes on average. Each month about 40-50 homes get listed, 44 homes on average go into escrow, 42 homes on average close escrow and some fall off the market without selling. There has been no dramatic increase in inventory and there is a stable buyer pool purchasing homes, hence a balanced market. Transactional volume is at about half or slightly more than previous years but the balance between buyer and sellers is healthy and stable which has been sustaining pricing. This is different from any past down markets where there was panic and owners flooded the market with inventory, resulting in mass competition for fewer buyers and prices dropped dramatically.
What is on the horizon? In their latest monthly forecast, economists with Fannie Mae’s Economic and Strategic Research (ESR) Group said they expect the Federal Reserve to implement a final 25-basis rate hike in May and then begin bringing rates back down by the end of the year as the economy enters a “modest recession.” If rates move downward towards the end of the year, the buyer pool should slightly increase. Inventory will likely not increase due to the above factors discussed and buyer competition will then increase. Reading the tea leaves, the 2024 market for Talega should be stronger than 2023 when it comes to pricing.
When we are hit on the daily with tons of economic factors that could change our market, you can get deep into the weeds very quickly trying to calculate where we are going. However, one factor in San Clemente and Talega that has always been consistent and often overlooked or downplayed, is our weather. Seems simple enough but with more people being able to live and work anywhere in the US, their level of comfort and safety are big factors in where they choose to live. We are lucky to live in such a beautiful, sunny place with average temperatures in the 70’s, low humidity, beautiful beaches, stunning sunrises and sunsets and tons of outdoor activities. I have enjoyed this lifestyle for 53 years being born and raised in San Clemente, I can’t question the rest of the world for wanting to live here in our paradise. The conclusion is that a consistent buyer pool with few choices will keep pricing stable with more potential to move upward than down.
The last question I didn’t answer is why are homes selling for more than last year while others are not? I’ll cover that in my next Green Sheet article or feel free to call, email or text me to discuss anytime.
Echelberger Group provides the expertise and resources necessary to make it easier for its clients. More than 20 years of experience in Talega and 52 years living in San Clemente, Doug and his team have an edge in local knowledge and connections. Echelberger Group provides a comprehensive range of services, from industry-leading technology—backed by its partnership with Pacific Sotheby's International Realty—and custom marketing strategies to regular updates and prompt communication that makes transactions efficient and stress-free. For more information, visit www.echelberger.com or call/text Doug at 949-463-0400.
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1.Duncan Doug, " Economy Resumes Gradual Slowdown Following Bank Turmoil"Fannie Mae, ESR Group, https://bit.ly/3AZgNv7