A look at the numbers:
Since 2000 median home prices in Novato have increased 189%
Since 2005, the former peak in prices, home prices in Novato have increased 62%
Since 2011, the bottom of the market, home prices in Novato have increased 141%
In 2022, Novato median prices increased 8.3%, reaching $1.3M for the first time.
2022 was an seesaw year for real estate
The year began with low interest rates and relentless buyer demand. Inventory was at historic lows and high buyer demand drove prices up. After seeing a 15.4% increase in 2021, we saw an additional 8.3% rise in 2022. What the full year figure hides is that prices were much higher than that mid year, and then a sudden doubling of mortgage rates caused buyer demand to plummet, which brought prices down to roughly the same point as at the end of 2021.
There was a lot of talk of low inventory in the beginning of the year, followed by an abrupt drop in demand and a normalizing of inventory levels. All in all 475 houses sold in Novato in 2022, which is just below the historical norm, but a big change from 2021 when 633 houses sold. A typical year has closer to 500 sales but anything in the 450-550 range is normal.
The only time in recorded history that every economist agreed house prices would go down was in 2020 when COVID struck... they were all wrong. What wasn't predicted was a surge of people with relatively well paying white collar jobs, that had a desire or need for more space. To top things off, discretionary expenses (restaurants, vacations, etc.) were curtailed, and borrowing money got cheap. What resulted was the "great reshuffling" which fueled housing demand across the Country.
With a doubling of interest rates this past fall, affordability reached an unsustainable level for many buyers. Both from a data perspective and a feet on the street perspective, it appears buyer demand will remain soft. It's likely we'll see a further softening in prices, particularly if the economy enters a recession, which many economists are predicting. It's unlikely however, that we'll see a big drop in prices with reluctant sellers keeping inventory low.
Visiting the economic round table of "experts", Danielle Hale (Realtor.com chief economist) predicts a 5.4% rise in 2023 (she predicted a 2.9% rise for 2022), Redfin predicts a 4% drop in 2023 (they predicted a 3% rise in 2022), Lawrence Yun, National Association of Realtors, predicts a rise in home prices of 0.3% (he predicted a 3% to 5% rise in 2022), CoreLogic predicts a 2.8% rise (they predicted a 7% rise in 2022), Zillow predicts a flat market (they predicted an 11% rise in 2022). All these are national predictions. It should be noted that more "affordability challenged" Bay Area markets carry more conservative outlooks by most economists.
Below is a deeper dive into some of the Novato data you'll only find only here at Burdell Real Estate.
Here's a look at the dollar per square foot changes:
Dollar per square foot ($/sq ft) is an important metric in assessing values. Here we see that $/sq ft prices have tracked sales prices, with an increase of 12.2% from 2021 to 2022.
In our scatter chart, each point represents a sale in 2022. As is typical, $/sq ft price overall increases as home sizes decreases. The median overall for Novato in 2022 was $661 (vs. $589/sq ft in 2021). The smallest increase was in the 4000-5000 sq ft houses, although all segments had strong gains. Prices commonly fluctuated between $400/sq ft and over $900/sq ft.
Prices vary based not only on size, but neighborhood, upgrades, condition, yard, views, style, neighbors, traffic flow, staging, and agent marketing skills.
It's always hard to predict any market, whether it's the stock market or the real estate market, but it remains true that over the long term the trajectory is always up. When you're planning to call somewhere home for the long term and you have the ability to enter the market, it's usually a good move. We're here to help you find the perfect place when the time is right, or help you through the selling process when life calls for a change. Feel free to reach out to us at any time.
For an up to date look at the current market go to our Novato Monthly Update page.
For a free professional estimate of your home's value go to our Get My House Value page.
As an aside, Agents usually need 3-6 weeks to bring a house to market, so NOW is not too soon to reach out if you are thinking of selling this Summer, or even further down the road. In fact, savvy Sellers contact us early, providing a running start, which in turn, allows them additional time to begin the process of purging and packing (no easy feat). In short, the sooner, the better for everyone involved.
If you ARE interested in selling your home this calendar year, we're here to help you manage the process and achieve your goal. Please reach out if you'd like an accurate assessment of your home's value.