With its wineries, climate, range of employment opportunities and outdoor recreation, the Tri-Valley is a sought-after location to live. This brings competition to the housing market, which was especially true at the beginning of this year.
"Initially, the market was thriving, displaying a stronger level of activity," said Elation Real Estate founder / owner and broker associate Gina Piper.
The higher-end segment of available real estate saw especially strong activity, with many homes selling swiftly, she said. This quickly depleted available inventory.
"The market has started to exhibit a bit of deceleration in its momentum," Piper said.
Inventory levels remain low, which has led to higher competition for available homes, Piper said. Conversely, 30-year fixed mortgage interest rates of about 7% have discouraged or disqualified buyers from qualifying for higher loans, which means the market is slower than it was.
"Despite this, there is still a considerable buyer demand in the area," Piper said. "However, it is anticipated that once rates decrease a bit, there will be a surge in demand, leading to a flood of buyers entering the market once again."
Low inventory and moderate to high buyer demand traditionally lead to what's known as a seller's market, or a market that favors sellers because competition leads to buyers offering more money and favorable terms to make their offer more appealing.
"A well-priced home that is presented attractively and effectively marketed stands a good chance of finding interested buyers," Piper said. "The demand for homes remains higher than the available supply, leading to a scarcity in the market."
Despite this good news for Tri-Valley homeowners looking to sell, interest rates have become a sticking point for sellers and buyers alike, with many adopting a "wait-and-see" approach, as they hope interest rates decline by year's end, Piper said. This strategy has its drawbacks, though.
"The number of buyers waiting for interest rates to decrease is a concern of mine," Piper said. "This delay may lead to an influx of buyers entering the market once rates do come down. Consequently, the increased competition among buyers would likely lead to even more multiple offers on homes and subsequently drive prices significantly higher."
While this sounds like a catch-22 — either buy at a low price with high interest rates now or at a high price with low interest rates later — Piper said there is another strategy available to buyers.
"It may be more advantageous to secure a home and purchase price at present, and then explore refinancing options when interest rates decrease," she said.
Although it comes with closing costs, refinancing allows homeowners to renegotiate loan terms to establish a new interest rate, draw on their equity or start over with a 30-year loan on a lower amount to reduce monthly payments.
"This approach enables buyers to establish themselves in the market and potentially benefit from a lower rate in the future, while avoiding potential price escalation caused by increased buyer activity."
Elation Real Estate with offices in Pleasanton and Danville, offers a "boutique feel with world-class results." With more than 30 years buying and selling homes in the Tri-Valley, the Elation team guides new and experienced home buyers and sellers through every step of the process.