Home prices are continuing to rise, and this is especially true for houses. House prices have increased 17% YTD, even though more inventory has been hitting the market each month and rates at times in the 7% range.
|
Year-over-Year (YoY) |
Month-over-Month (MoM) |
|
|---|---|---|
|
Homes for Sale |
+22% |
+5% |
|
New Listings |
+16% |
+3% |
|
Homes in Escrow |
+3% |
-5% |
|
Closed Sales |
+1% |
+6% |
|
Median Sale Price |
+8% |
+2% |
House prices continue to increase MoM at 4%, with condos slowing down last month to -1% MoM. Condo prices could continue to be more challenging to measure historically, given the significant increase in luxury condos in LA, and those big sales can easily sway the numbers up and down.
Prices Have Fully Recovered
We are now officially past the highs of 2022, even though rates have been in the high 6% or 7% range for most of this year. There’s so much pent-up demand, and there are still fewer homes for sale than buyers. House inventory is down roughly 40% compared to May 2019. In comparison, condo inventory is up, which could explain why condo prices haven’t increased at the same rate as houses. Supply and demand are still having the biggest impact in this market.
Interest Rates
Buyers could finally be getting the news they’ve been looking for. Multiple economic reports have been released in the past week or so, indicating that inflation is easing and we are seeing a big drop in the 10-year treasury yield, which will cause mortgage rates to drop. The 10-year is the lowest it has been for a month. We have another big jobs report to be released on Friday and the all-important CPI data on Wednesday. If both favor inflation easing, expect to see mortgage rates decrease. However, if both those reports buck the recent trend, expect rates to tick up again and continue this rollercoaster year. Also, remember that the widely discussed potential rate cut in September doesn’t mean mortgage rates will drop .25% the day after it’s announced. If the Fed cuts rates in September, mortgage rates will already have this priced in because of how the bond market reacts to economic news before then.
National vs Local
In this ever-changing market, getting caught up in what the national media says is easy. However, remember that LA is its own market, mainly because there’s not a lot of vacant land to build more inventory. In contrast, there is room to build in the rest of the country, which makes up most of the data. If you have questions about your area, reach out, and I will happily chat about it.
