Tulare County Real Estate Market Report for May 2024 - David Haun with Legacy Real Estate

Dated: May 9 2024

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Price Per Square Foot Rockets to New Highs

The average sale price in April jumped to $401,664, which is a nice increase as we have been dropping toward the end of 2023 into 2024.

Last month we saw a slight decline when we would typically see things start increasing into the spring, so we were talking about concerns that the market might be stalling because of rates or other factors.

It looks like we may be passed those concerns after home prices spiked here in Tulare County last month.

April is typically a strong month. Two years ago, we spiked in April and then declined throughout the rest of the year. Last year we had a spike in April, we dropped back down in May, and then we saw another spike in June as we rolled into summer.

These are probably the two scenarios that I think may be looking at this year as well.

Will we see the market continue to increase into the summer?

Or will this be the peak as we decline until next spring?

What decides which of these paths is more likely?

I think the Fed is a major factor in that. So the Fed has been talking about holding rates - not a lot of talk of dropping rates, but at least holding them - stopping the increase on rates.

If the Fed does hold rates steady or they decide to start dropping rates (which they claim they will at least once in 2024), I think we see the scenario where real estate continue to rise into the summer. 

That would mean a strong summer as we head into the election and then we'll see those typical drop-offs into the winter months.

So price per square foot in April spiked to $237 per square foot in April. The previous all time high was in June of last year at $230 per square foot. So this is a huge increase and a new all time high in price per square foot.

Is that a sign that the market is super strong and buyers are ready to go and they have a lot of money? I don't know. I don't feel like that's what I'm seeing in the market and it's not what I'm hearing from the buyers that I'm working with. 

My theory is that new construction is selling at a higher rate compared to resale homes recently because they can offer better rates and closing cost incentives. Being brand new, these homes have PREMIUM price per square foot.

The number of new listings on the market in April was 353. This is a great sign because all throughout 2023 (or at least the second half of 2023), new listings were low or declining. 

Nobody wants to sell their house at 4% interest to go buy a new house at 8% interest. That's a tough sell. When you look at the quotes next to each other, it's like, "oh my gosh" so I can understand this.

Recently though, it seems like people are starting to accept that the rates are what they are and they're probably not going to go back down to 2%-3% anytime soon. We're seeing people jump back in the market!!

Looking at total Homes For Sale, we had 524 in Tulare County as a whole. Considering 353 of those were new listings, that leaves maybe half of that as existing inventory from the previous month - so about 1.5 months of inventory on average right now.

That's actually fantastic for the sellers. That means if you're listing your property, you're very likely to sell it quickly and for a good amount of money as long as you're pricing it properly. 

The number of pending sales in April was 282 in Tulare County. We've been rebounding in 2024, which is fantastic to see. Activity is up and that's a really good sign that buyers have kind of accepted rates where they are.

The number of closed sales, however, pulled back in April. You might be asking yourself, "Why?"

We've seen a lot of cancellations lately. I think when buyers get the initial quote and see the monthly payment with that seven 8% rate, it can be intimidating. I think some buyers who might be on the fringe, they just get scared off by that and they say, nevermind. 

In summary...

Average sale price rebounded in April to $401,664. We often see home prices spike in April as we roll into spring as people are getting their tax returns back, but it's not always a sign of continued growth as we showed in previous charts.

Sometimes prices continue to increase throughout the summer, sometimes April is the high month and we start to see decreases there throughout the winter. So we shall see how the market turns out now and which path we are on.

Price per square foot also spiked to $237 per square foot in April, surpassing the previous all time high of $230 per square foot in June of 2023. Now, this is a statistic that's really supporting the position that market is strong.

It's suggests the market will continue to be strong into the summer and that we're going to see more buyer activity ans more seller activity as we continue.

I'm on the fence, honestly, if you asked me to bet, I think we're going to stay right about where we are throughout summer. If the fed drops rates or does something crazy, a lot can happen.

The number of new listings continue to improve with 353 new Tulare County properties hitting the market in April, and this should continue to keep the market moving into the summer. As long as new listings are coming on, as long as you've got people to buy them, the market's going to keep churning and keep moving.

Pending sales increased while closing sales decreased in April, and a lot of people, again ask why that is. I think it's because cancellations are up. These fringe buyers qualify for a loan and get a pre-approval that it says you qualify for X number of dollars.

A lot of times you don't know what that actual payment's going to look like with the current interest rate. So once you get into escrow and they do all the escrow documents, the lender sends you the initial quote with that rate in there and your home insurance and everything else... that initial monthly payment can be pretty scary for some people. So I think a lot of fringe buyers are getting scared off by that, and we're seeing cancellations up from previous years.

The number of homes for sale is slowly increasing with 534 available in April. With 353 of those being new listings, I think homes are selling fairly quickly. It's a great time to be on the market as a seller priced properly, and your home will sell. You'll get multiple offers and you can negotiate those terms to be optimal for you.

As a buyer, it looks like inventory is increasing. So if you haven't found something that you like yet, hang in there. As we roll into the next few months heading into summer, I think you're going to see a lot more inventory hit the market.

People don't want to upend their kids in the middle of a school year, but as soon as summer hits June, I think you're going to see a lot more listings on the market and you'll be able to find something that you like.

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David Haun

David is a licensed Realtor with the Synergy Group at Legacy Real Estate Inc. With an MBA specializing in digital marketing and an extensive background in project management, David brings a unique ble....

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