As we welcome the new year, we can now take a complete look at what the real estate market did in San Pedro for 2022. Though we saw interest rates double, 3.22% to 6.5%+, home prices have actually continued to climb! Although homes did not sell as fast as they were a few years ago, sellers are still moving, buyers are still looking to buy, and prices are still increasing in San Pedro. Read below for an in-depth look!
In 2022, interest rates increased tremendously, going from 3.2% in January to 6.5% or more by December. The increase caused many potential buyers’ estimated monthly payments to increase dramatically, in some cases so much so that they were forced to downsize their search or put their house hunt on hold. As a result, the drop in buyers caused properties to sit on the market for longer periods:
Interest rates, shown in red, began the year in the low 3% range, but quickly got to over 6%. Average Days on Market (DOM), which is the time a home sits on the market before being sold, also increased from the high teens in January, to 30+ days by November.
Normally, higher interest rates translate into lower property prices. However, that normally happens over a longer period of time than what we have experienced with the rate hikes in 2022. The sharp increase in rates happened too quickly for home prices to make the adjustment. In San Pedro, home prices actually INCREASED in 2022.
Average sale prices for single-family homes and condos/townhomes in San Pedro have continued to climb, averaging well over $800,000 per unit since the beginning of 2022. As of January 2023, the average sale price for residential property (Homes, Condos & Townhomes) in San Pedro is $892,939. See single-family and condo stats below for more details.
Single-family home sales in San Pedro were pretty consistent throughout 2022, though they were inevitably affected by rates. Although rates quickly went from 3 to 5 percent from March to May, the number of homes sold rarely dipped below 24 units per month until September, when rates went over 5.5%. In fact, homes sold in January, March, April, June, July, and August all sold in 18 days or less. DOM also stayed relatively low, averaging below 20 for much of the year until September when the rates went above 5.5%.
Despite the increasing rates and DOM, average home prices remained steady, hovering between the high $900,000s into the $1,000,000 range. However, months with sharp increases in interest rates, shown in the darkest red cells, saw prices dip the most. This can be observed in July’s and October’s average home prices; the two instances where the price dipped below $1,000,000.
Overall, single-family homes in San Pedro saw a slight UPTREND in sale prices for 2022, with the average sold price in January 2023 coming in at $1,049,948.
The real estate market was a bit erratic for condos and townhomes in San Pedro for 2022. DOM varied from a low of 9 days in May, up to 52 days by December. Similarly, the number of units sold varied from as many as 30 sold units in April, to just 11 in November.
The most dramatic changes to price and DOM were again likely caused by a sharp change in interest rates. Months with lower rates sold the most units for the highest average prices. Also, the number of units sold dropped drastically when rates went above 5%.
One curious note we can make from the numbers above is how the number of homes sold increased whenever interest rates leveled off or decreased, as can be seen at the beginning of the year, in August, and again in December. Whenever it looks like the market is settling down and starting to be consistent, buyer interest and confidence seem to pick right back up. Likewise, the opposite happens if things get volatile. This tells me there are still plenty of cautiously optimistic buyers in the market, meaning there is still plenty of demand for homes.
Similar to single-family homes, condos and townhouses in San Pedro experienced increased DOM and average sale price. Overall, condos and townhomes in San Pedro saw a slight UPTREND in sale prices for 2022, with the average sold price in January 2023 coming in at $613,811.
Even with interest rates in the mid and high 6% range, buyer interest seems to be ramping up for 2023. Both condo and home sale prices are trending upwards slightly for San Pedro and we expect to see them stay on that trajectory as long as rates do not get overly volatile.
Buyers still have much leverage to negotiate with in 2023. Asking for repairs, closing cost credits, and other items are much more likely to lead to concessions compared to only a year ago. There simply are not the same amount of buyers in the market today as there have been in recent years, so buyers have fewer rival buyers to compete with. The challenge will be committing to a property and coming to terms with a seller.
If you are selling in 2023, you can expect to be on the market for at least two weeks. Great listings will always sell fast, but every component must work in unison: presentation, price, and promotion. Even then, we are seeing some listings sit for several weeks, so patience is key. Although prices are increasing, be cautious when setting a price. It is important not to over-price in changing markets, such as the one we are in. The market can be intimidating to some buyers, and potentially scaring away the few that are left with a high sale price may not be a wise decision if you really need to sell. Properly presented listings will always command a higher sale price and sell faster than unprepared homes. In other words, this is not the market to cut corners! Make sure your home looks as good as it can if you are selling.
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Sources: CRMLS
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