We are back to 2021 prices. After the madness of the first half of 2022, and the correction during the second half of 2022, the market seems to have found its feet again. We’re seeing 3-5 offers on desirable properties, a sign of a healthy market and nothing too crazy. The luxury market remains soft, although properties under $2.5M are selling at a good pace.
|
Year-over-Year (YoY) |
Month-over-Month (MoM) |
|
|
Homes for sale |
-19% |
+1% |
|
New Listings |
-20% |
-7% |
|
Homes in escrow |
-11% |
+4% |
|
Closed sales |
-15% |
+10% |
|
Median sale price |
Flat |
-1% |
New listings are again the pain point. Of course, we all know why… interest rates.
August 2018 - 3,545
August 2019 - 3,149
August 2020 - 3,602
August 2021 - 3,258
August 2022 - 2,789
August 2023 - 2,225
We’re roughly 800 homes short of new listings compared to the August average over the past six years. With the median days on market hovering around 13 days, the limited amount of new listings are being snapped up very quickly.
Prices
I’m not one to make too many predictions in this market, but I don't see prices coming down anytime soon if you’re purchasing a house under $2.5M. I actually expect them to shoot up when rates come down. There are just too many buyers compared to potential properties hitting the market. Below $2.5M are mostly Millennial first-time homebuyers who are entering the market on mass, given they’re the largest generation since the Baby Boomers. For those looking above $3M, there’s better news for you as this market has softened. Generally, buyers are upgrading to a better or larger house at this price point and are fine staying in their current home until rates improve.
Rates
Interest rates are still hovering around the highest they’ve been all year, yet it’s not deterring buyers, given pending and closed sales for the month are up. There’s growing momentum amongst buyers that they’re better off buying now and refinancing later rather than dealing with the potential of a crazy market when rates are in the 5’s.
A Sign the Market Has Recovered
I received an email from the biggest home builder in SoCal alerting agents they are back buying homes again. This company buys teardowns all over SoCal and then builds new construction in their place. They heavily analyze the market, knowing when to get in and get out. So, the fact this company is buying again is a solid indicator the market has recovered.
