Prices were flat YoY and increased MoM. However, there are troubling signs for sellers with a noticeable drop in closed sales and homes in escrow. I’ve been feeling this in the market real time, where buyers are pulling back, and the numbers reflect this.
|
Year-over-Year (YoY) |
Month-over-Month (MoM) |
|
|---|---|---|
|
Homes for Sale |
+24% |
+3% |
|
New Listings |
+6% |
+1% |
|
Homes in Escrow |
-8% |
-8% |
|
Closed Sales |
-6% |
-5% |
|
Median Sale Price |
FLAT |
+3% |
In addition to what I’ve seen in the trenches, I’ve also noticed this in my marketing. I run two sets of Google ads each week, one targeting buyers and the other targeting sellers. I’ve noticed a significant drop-off in activity for the buyer campaign, whereas the seller campaign has remained the same, and at times, even increased.
What’s Happening with the Market?
Buyers are continuing to pull back, and this could be due to several reasons. Uncertainty is likely the primary driver, followed by frustration with the market, whether that stems from a lack of quality inventory or unrealistic sellers, and, of course, affordability. Admittedly, these are the same problems buyers faced last year, amid the uncertainty surrounding the election. There’s no denying that politics are playing a big part in this market, and as of now, it seems there’s no end in sight. Sellers have to be realistic about price. Otherwise, their property will sit. On the other hand, it is increasingly becoming a market where buyers can start low-balling homes that have been sitting on the market and see what sticks.
It’s Not 2021
Even though it looks encouraging to see inventory 24% higher than last year, that number isn’t telling the whole story. The reality is that a lot of that inventory is overpriced, with sellers thinking it’s still 2021. Even though prices are up compared to 2021, the buyer sentiment has completely changed. Back then buyers were ok taking overpriced homes, because they were happy to get whatever they could and lock in that low interest rate. Now rates can be 2-3 times higher than what buyers were getting back then, so something has to give. What makes it confusing for sellers is that some homes are still selling quickly and above the asking price. The difference is that those homes were priced correctly to begin with, and they’re in very desirable neighborhoods.
Mortgage Rates
Rates haven’t changed a lot over the past month. The rollercoaster ride rates were on in April/May have subsided as investors are no longer making big knee-jerk reactions to Trump statements. For now, we remain in a holding pattern until there’s more certainty with the economy. On a positive note, lenders are still providing ARM rates that are much lower than fixed rates. Be sure to check with a lender to determine which ARM you qualify for, as the rate may surprise you.
Palisades
There are 200+ lots for sale on the MLS, and there are more for sale off-market. 28 are in escrow, and 23 have sold in the past month. Of the lots that did sell, all but two of them sold below the asking price, with the average price selling 7% below the asking price. There appears to be momentum in the lots entering escrow and selling, so we will see if that continues. Every Palisades owner I talk to feels mostly the same, and they’re unsure what to do, given that the timeline for when it will return to normal doesn’t appear to be shrinking just yet.
