February Market Report

Prices dropped YoY and slightly MoM. However, a lot of this had to do with condo prices falling. House prices were up MoM by 2%, with condos down 7%. YoY house prices were down 3% and condos down 7.5%.

We saw the usual big increase in new listings MoM as we come out of the holidays, but surprisingly fewer than last year. Most agents are expecting more inventory than last year, so we will see what happens over the coming months. The big MoM drop in closed sales is due to fewer homes entering escrow during the holidays.

Condos

It's been a rough 12 months for condos, and the past couple of months have made it worse. Prices have dropped to where they were in December 2022, so any gains condos have made since then have been wiped away. We are entering COVID-like market conditions for condos, as buyers continue to gravitate toward houses, with condo sales significantly lower than in pre-COVID years. The ever-increasing HOA fees, as well as uncertainty about whether a building can obtain insurance, are causing buyers to either continue renting or wait until they can find a suitable house. Months supply for condos is at its highest level since MLS data began tracking this in 2012, and days on market are at their highest level in the past five years. It looks like this year will continue to be a tough time for condos unless we see a noticeable drop in mortgage rates.

The Market

I’ve been on vacation for the past two weeks, so I’m not as in tune with the market as I normally would be. However, among the agents I’ve been speaking with, it seems my prediction of increased optimism has come true, but it hasn't necessarily translated into offers. Showings are up, as is open house activity, but it’s mostly the desirable homes in good locations that are getting the most action, with offers in hand, very similar to what we experienced last year. So, it’s very much a let’s-wait-and-see market for now.

Interest Rates

Mortgage rates have returned to near 12-month and also 3 year lows as new economic data has come through, causing the 10-year Treasury to drop. This is despite the Fed not cutting rates, and another good example of how the Fed doesn't directly determine mortgage rates. Although, as I write this, the minutes of the last Fed meeting have just been released, and they show uncertainty among the Fed board about whether to make further rate cuts. So it looks like this year will be another year of uncertainty for mortgage rates. 

Palisades

There has been a small increase in inventory since the holidays, and 39 lots have sold since the new year, with 27 in escrow. As we did last year, we will be watching this space closely to see how many new lots hit the market as the year progresses and whether prices change.

Click below to follow the land market in real-time. It’s an active link that will update with the current day's data. 

https://www.themls.com/MarketSnapshot/T/YWFhYWJmamRi