November Market Report

Prices remained flat last month after a small increase the previous month. The market continues to behave in an unpredictable manner and doesn’t want to be confined to a box. Homes, in various price points and locations, are performing in their own ways.

As we continue in this unpredictable market, one thing remains true if you want to sell your home: price. This is always the case, but in markets where buyers are more motivated, they can sometimes overlook price if the home checks most of their boxes. In today’s market, not only do the boxes need to be checked, but the seller needs to be very realistic with their price the moment they hit the market.

The Gap is Narrowing

For most of this year, a disconnect has existed between buyers and sellers. Sellers would think their home is worth more than it is and not accept a buyer's offer, or accept their offer, but provide very little to no concessions during escrow if the buyer uncovers issues. Thankfully, this is changing. Sellers have recognized the market we’re in and are making buyers feel more comfortable about moving forward with a purchase. This was recently true for my buyers, for whom I was able to negotiate a $60k credit. This is also evident in the numbers. Of the closed sales I see, almost all of them are selling below the asking price. That’s not to say that all these homes are being sold below market value. It just means that sellers are finally ready to meet buyers at the negotiating table and play fair. Sellers and also homeowners who have been waiting to sell, this is good news for you. This will encourage buyers to get off the sidelines and enter a market that is fairer, rather than one dominated by stubborn sellers.

Mortgage Rates

Another reason why buyers have been coming off the sidelines is that mortgage rates have gradually declined to their lowest level in twelve months. This is despite mortgage rates increasing after the Fed cut rates last week. This could have been confusing to some, but for those who have been reading my report, you are aware that the Fed doesn’t directly set mortgage rates; instead, investors in the bond market do. So even though the Fed cut the Fed Funds Rate by 1/4%, this was already baked into mortgage rates. However, what caught investors by surprise is Powell not committing to another cut this year. In previous meetings, the Fed had hinted at a cut in December, but they have reassessed that opinion. The negative sentiment caused investors to sell bonds, which drives the price down and the yield (rate) up, and in turn, mortgage rates too. It was another example of how the Fed doesn't directly control mortgage rates.

There’s another reason why mortgage rates have been declining, and this is a silent contributor that often goes unnoticed: the spread between the 10-year bond and mortgage rates. Banks have been reducing mortgage rates at a pace higher than the 10-year rate has been decreasing, contributing to mortgage rates being at their lowest levels. This is happening because the financial market is feeling more optimistic, so lenders are taking a smaller markup.

Condos

There is the largest amount of condos seen on the market since 2012, except for 2020, when nobody wanted to live in a condo building. It’s been a rough year for condos with a lot of choices for buyers, as well as insurance-related issues. This has been especially true in Santa Monica, where I would constantly see price reductions day after day. What has been encouraging for Santa Monica is the increasing number of condos entering escrow lately. This includes condos that have been sitting on the market for months, and this plays into what I said in my last email. Sellers are ready to move on; all you have to do is submit the offer. You don’t need to wait for them to reduce the price. If you do that, you run the risk of other buyers submitting an offer, and then all of a sudden, you either miss out or are put into a multiple counteroffer.

Reach Out

If you’re thinking about buying or selling, I would love to hear from you. Or even if you have any general questions. A common line I get from clients or potential clients is that they think I’m too busy and they don’t want to bother me. I will always make time for you, so don’t hesitate to reach out.

Palisades

New listings increased last month after the summer slowdown. The median sale price increased slightly, but this can be influenced fairly easily by a few higher-priced sales. There have been just over 300 land sales on the MLS, with additional sales occurring off-market. With about 200 on the market now, that leaves thousands of homeowners deciding either to rebuild or are still unsure what to do. 

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