Are you planning to buy a home in or around Napa, California in 2023? Wondering…
If you keep up with real estate news and trends, you probably already know that the San Jose real estate market is cooling down. We can see evidence of this in a variety of metrics, from home sales to pricing trends.
The question is, how will this affect home buyers planning to buy a house in the San Jose area? Could a cooler housing market benefit buyers in 2022 and 2023?
Let’s start with the short answer before diving into the data. Through the rest of 2022 and into 2023, San Jose-area home buyers could take advantage of a cooling real estate scene. They probably won’t encounter as much competition from other buyers and should have more properties to choose from as well.
And wouldn’t that be a nice change of pace?
San Jose Housing Market Slows Down in 2022
Earlier this month, researchers from the national real estate company Redfin published a report that showed which housing markets in the U.S. are starting to cool.
As it turns out, most cities across the country are experiencing a real estate cooldown in the second half of 2022. And that’s to be expected. Nationally speaking, the housing market took off like a rocket during the second half of 2022, and this continued throughout 2021. So at this stage, a cooldown is a step toward normalcy.
But some real estate markets are cooling faster than others. This trend can be seen in cities and metro areas that experienced the most price growth over the past two years. In other words, the hottest markets of 2021 seem to be slowing down the most in 2022.
And the San Jose metro area is one of them.
In fact, the above-mentioned report named San Jose as the fastest cooling real estate market in the country, among the 100 most populous metro areas.
According to the July 2022 housing report:
San Jose is cooling at the fastest clip, with measures of homebuyer demand and competition dropping off quicker than any other major metro this year. The supply of homes for sale in San Jose was up 10% year over year in May–but just three months earlier in February, supply was down 43%, indicating that buyers are now gobbling up fewer homes.
Home buyers who are planning to purchase a house in the San Jose-Sunnyvale-Santa Clara metro area should pay close attention to these trends. If the local real estate market continues to cool down in 2022, and into 2023, it could bring good opportunities for buyers seeking a home to purchase.
A Good Time to Buy, if You’re in for the Long Haul
For the past two years, home buyers across Santa Clara County have endured fierce competition, bidding wars, and lightning-quick home sales. This is especially true in San Jose, the county seat and most populous city in the region.
But change is in the air.
Like many housing markets across the country, the San Jose real estate scene is cooling down in the second half of 2022. Price growth has stalled and sales activity has declined. There are also more homes coming onto the market, after a prolonged inventory “drought.”
These trends could benefit San Jose-area home buyers who plan to enter the market over the coming months. Specifically, here are three ways buyers could benefit:
- A slower pace: According to a July 2022 report from the California Association of Realtors, home sales in Santa Clara County declined by 31% over the past year. These and other data points show that the San Jose metro area real estate market is slowing down. Going forward, home buyers could enjoy a more relaxed house-hunting process, compared to the frenzied pace of 2021.
- More properties: According to a June 2022 report from Realtor.com, the “inventory recovery made major strides in June, with the number of homes available to buyers climbing at its fastest yearly pace of all time (+18.7%).” Within the San Jose-Sunnyvale-Santa Clara metro area, inventory rose by a whopping 33% year over year. This is partly why the San Jose real estate market is cooling — there are more homes coming onto the market. This could make the house-hunting process easier and, ultimately, more successful for buyers.
- More leverage: A couple of years ago, the housing market shifted into overdrive and the supply of homes for sale plummeted to record lows. This put sellers into the driver’s seat, giving them more negotiating leverage. But this too appears to be changing. With more homes hitting the market, sellers within the San Jose real estate market are feeling the pressure. Price reductions have become more common, and bidding wars have faded. These trends could give home buyers more negotiating leverage than they’ve had in a while.
The takeaway: There’s no doubt that the San Jose real estate market is cooling down in 2022. And the trend could continue into 2023 as well. While this might be problematic for sellers, it represents a golden opportunity for buyers. Home buyers in San Jose (and across the broader Bay Area) could soon benefit from a more buyer-friendly housing market.