June Market Report

What a confusing market we’re in… Sales continue their downward trend, yet prices have returned to all-time highs. Last month, I discussed how sellers should be concerned that many buyers are pulling back, and how this could negatively impact prices; now we are seeing this. Very weird indeed…

This is the second consecutive month that closed sales have declined MoM, and it’s happening during the prime selling season. With pending sales also down, expect to see a third straight month of declining sales next month. If it weren’t for the sluggish condo market, prices would be even higher. House prices are up 5% both YoY and MoM. 

I Had a Theory

I suspected that the reason prices have returned to all-time highs is that the upper luxury market performed exceptionally well last month. There were 29 sales above $10M last month, about 12 more than average over the past year, with a median sale price of $13.5M. My theory was that these luxury sales were driving up the median sale price for the entire market. However, when I looked at the sales below $10M, even though closed sales were down, the median price was up MoM about 6%. Even when I stepped down in $1M increments, the median sale price was still up MoM. This defies what we’re feeling in the market and what buyers are telling us. I’m seeing more homes sell below the asking price than above, yet prices are up.

Inventory

Inventory is increasing, which is adding to the confusing market and, aside from rates, is a main reason why some buyers are holding back. Buyers are hoping that with the increased inventory, prices will come down. However, at least for now, that isn’t the case. Buyers, this is your chance to go in and lowball sellers who have homes that have been sitting on the market while other buyers sit back. We are approaching August, which is historically one of the slowest times in the real estate market in LA. Don’t be afraid to submit those low offers. The seller might actually be waiting for it, and if they’re not, you will know soon enough. This tactic won’t work on homes that have only been on the market for a few weeks. Be smart about it, and you could get a good deal.

Mortgage Rates

The Fed is under increasing pressure to lower rates, and given that it doesn’t have a meeting in August, the meeting at the end of July will be its last chance this summer. Despite all the pressure they are under, most experts agree that the Fed won’t reduce rates. There’s a fear that we haven’t truly felt the effects of the tariffs, and if the Fed cuts too early, they will need to increase them again. On the other hand, some fear that the Fed is waiting too long and should cut now. If they do cut, this could kickstart the real estate market, and those buyers who have been sitting on the sidelines might jump back in. They will announce their decision on July 31st.

Palisades

There are 215+ lots for sale on the MLS, with more for sale off-market. 26 are in escrow, and 39 have sold in the past month. That’s 17 more sales than the previous month, so activity is picking up. 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