California Continues Upward Price Increase -- See Comparisons

 

Current graph on Calif home price in 2024

 In spite of fluctuating rates, going down, the back up, demand is high and supply is low. Recent data provided by CAR economist Jordan Levine this last week and NAR, shows that currently 32% of home sales are all cash, back to where we were a few years ago. So 1/3 of buyers are not concerned with mortgage interest rates.  The current California home price is $788,940, and the number of single family active listings was 29,000 in January, down from 32,000 in January 2023. And, we are at the lowest level of mortgage applications in the last 30 years!

Why is buyer demand so low right now, when the U.S. unemployment rate is at 3.6%?  Is someone telling you as a buyer it's better to wait because interest rates will be coming down even lower? That is very unlikely to happen.. 

Interest rate data forecast

Typically, the gap between the 10-year Treasury yield and the 30-year fixed mortgage rate spans 1.5 to 2 percentage points. For much of 2023, that margin grew to 3 percentage points, making mortgages more expensive. - Bankrate.com

 Click on this link to use the Purchasing Power Calculator, which provides multiple comparisons for the buyer's location and financial situation :  http://www.car.org/marketdata/interactive/interestrateaffordability

We all remember the extremely low interest rates in the 3% range during Pandemic housing market, and how that coincidentally pushed prices up in bidding wars. It's still a competitive market, but as more listings come on the market in 2024, there is hope that buyers will have a better playing field.

 

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

Housing Inventory/Supply in Southern California - It's a Big Issue

Data as of 2-24-2023 - Market Summary

Housing inventory has been an issue for about 10 years, but one bright spot in the graph shows that, overall, inventory in Los Angeles County has increased to 3.1 months supply as of December, 2022. According to data released by California Association of Realtors, this is an increase of 138%+ compared to 2021 when the houses were being consumed by multiple offers in a matter of days.  It's also an overall increase compared to previous years when inventory was as low as one month in many cities/neighborhoods. But it's still 50% lower than what is considered the traditional time for inventory supply:  which is 6 months, meaning that at the present rate of sale, it would be 6 months before there were no houses left to sell if no new properties came on the market during that time.

The inventory increase shows similar levels for statewide and nationwide, but is still well below the 6 month standard. What is completely obvious is the $200,000+ income required to purchase in Los Angeles County and California as a whole compared to the lower national average of $94,400.

Graph of sellers in Jan and Feb

Steven Thomas, Southern California economist who publishes Reports on Housing, follows the market in his weekly videos on You Tube and Facecook.  In his lastest weekly report, new listings are down 41% in January, and February is down 40%, or a total of 17,000 missing for sale signs in Southern California, with San Diego being the most affected. Note the graph lines showing levels in years since 2015, and where we are now.  One of the major reasons, according to him, for the lack of inventory are the very low interest rates current property owners are enjoying--not giving enough incentive to move.

If you would like to find out about the selling process for your house, condo or 4-unit property, please contact me for vital information about selling, whether yours is an owner-occupied property or investor owned.

#marketvalue #LongBeachrealestate #housinginventory

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

More on California's 2022-2023 Housing Market Outlook

For Southern California as a region, inventory has come up to 3 months, but is still not considered a "normal" amount of housing on the market. Compared to Sept. 2021, price has increased by 3.8% while homes sales decreased over 32% in same period.  In Los Angeles County, September 2021 showed 3,630 home sales, but the September 2022 volume reduced to 2,481 homes sales, and list price to sales price ratio was 97.8%, meaning on average sales prices were over 2% lower than list.  Orange County homes sold even a little lower percentage at over 3% below list.

 

The market is not as competitive

Housing affordability in Los Angeles County in 2nd Quarter of 2022 was at 16%,  Orange County at 12%, meaning these counties are in the bottom third of housing affordability in California. Lassen County stands at highest affordability rate in the state -- at 54%.

Fed Funds rate predicted to come down

Buyer demand in the housing market is dipping below pre-pandemic markets, as shown by the dip in mortgage applications in most of 2022, compared to 2018-2021.

Housing supply constraints continue, as shown by the number of housing permits issued, plus the number of years owners stay in a home before selling, another great cause of limited inventory. The current average length of stay is 10 years, whereas in 2006 it was 5 years before selling. 

Don't expect a surge in foreclosures, California has the lowest rate of foreclosure at .6%, and most other states are under a 3% rate for foreclosures. In recent years buyers have had higher down payments, creating greater equity in their homes, and the percentage of California buyers with second mortgages has decreased from 43% in 2006 to 2.2% in 2022.

California's median home price for 2023 is predicted to reduce to $758,600 from 2022's $831,000.

• Housing demand will continue to pull back as economic uncertainty and affordability challenges remain
• Supply shortage will still be an issue despite improvement in housing inventory in the short term
• Prices will soften in the next few months but should begin to stabilize in H223
• Inflation will remain a threat to the economy and the market in 2023
• Rates will rise further and will peak in mid-2023
• Buyers and sellers need REALTORS® even more to navigate through the market uncertainty

 Demand will continue to slow in 2023, and home prices will slow, but the type of market seen in 2009 is not predicted to occur, inflation is not predicted to abate until 2024, interest rates may continue to rise as the Fed tries to fight inflation. 

 

Thanks to CAR's Oscar Wei, Deputy Chief Economist, the source of this information at our Fall Forum.

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

August 2022 State and Los Angeles County Market Reports

Calif August sales and price report

Statewide, California inventory reached highest level since 2019, but at 2.9 months of supply is still well under the norm of 6 months.  Both time on market and median price of a single family home were up, making some sellers who only knew the previous pandemic market ask why it was taking "so long" to sell?  Well, there's nothing wrong with being on the market 19 days before selling. It actually is good to give both buyers and sellers time to think about choice of property and for sellers to review an offer.

Los Angeles County Market Update

 

For the County of Los Angeles, inventory in August was at 3.1 months, with the median price of a single family home at $854,960, a 1% increase from the prior month, and a 3% increase from one year prior.  But total home sales in the County decreased over 29% from this time last year, although they increased about 1% from the previous month.   Median time on market for the County was 16 days, a 77% increase from this time last year.

Interest rate volatility, and upward jumps, have had an impact for many buyers, and with conventional rates around or above the 6% level now, although still low by historical standards, will continue to impact buyers dependent on mortgage financing.  From California Association of Realtors:

“It’s encouraging to see that August’s sales pace rebounded above an annualized 300,000 units sold,” said C.A.R. Vice President and Chief Economist Jordan Levine. “Although we do not expect a rapid bounce-back because the Fed is expected to continue raising interest rates to get inflation under control, the monthly increase in closed and pending sales suggests that the market may have already priced in most of the rate increases to date. Still, buyers will continue to grapple with rising costs of borrowing, which will keep home sales below the 350,000 annualized pace for the remainder of the year.”

 

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996