Prices dropped significantly MoM and slightly YoY. I'll go into more detail below on why this isn't a sign of the market crashing.
|
Year-over-Year (YoY) |
Month-over-Month (MoM) |
|
|---|---|---|
|
Homes for Sale |
+9% |
-13% |
|
New Listings |
-2% |
-27% |
|
Homes in Escrow |
-2% |
-8% |
|
Closed Sales |
-1% |
+12% |
|
Median Sale Price |
-2% |
-6% |
It was a strong end of the year with sales up MoM. This would be a combination of buyers finding motivated sellers and also lower interest rates.
Prices
Despite the big MoM drop in the median sale price and the slight YoY decline last month, when looking at rolling 12-month data for houses, which smooths out seasonal fluctuations, prices aren't dropping; they're stable, with either no changes or very minor increases. Looking at the same data, prices since the pandemic ended bottomed out around mid-2023 and have been steadily increasing to their current levels. Keep in mind, this is the median for the entire LA and South Bay house market, with different neighborhoods and pockets experiencing their own markets within the market. Condos are a good example of this, as they dropped in price last year and have struggled more compared to houses. A potential explanation is that you have high interest rates, plus HOA fees that always seem to be increasing, adding about $600-$700 a month. It just becomes unaffordable, and renting is much cheaper.
Interest Rates
Last week, the interest rate for a 30-year fixed dipped below 6% for the first time since early 2023. Admittedly, it was only 0.01% below, but it was an important moment after a year of high rates. This was caused by Trump announcing that the government would buy back $200 billion in mortgage-backed securities. What this did was effectively reduce the spread between the treasury note, which has a big impact on mortgage rates, and the mortgage rate itself. Mortgage rates are roughly between 1% and 1.25% lower than they were 12 months ago. This should have a noticeable effect on market sentiment and how buyers feel about making offers, given that their monthly costs are much lower than they were a year ago.
Palisades
Last week was tough for many residents with the anniversary of the fires, but most are feeling resilient. I have buyers purchasing one of the few houses that weren’t burnt down on this particular street, so I’ve spent a lot of time in the area over the past few weeks. It still feels a little surreal, but at the same time, there’s a good amount of new homes going up. It’s taking time, but it will get there.
The year finished with about 385 lots being sold, with another 30 in escrow, and about 140 on the market.
