November Market Report

In a very surprising result, home prices increased MoM. I was somewhat expecting this YOY, but certainly not MoM. The market has been quiet since the end of September, and I’ve seen first-hand price reductions increasing. Condos were up over 5% MoM, with houses up slightly over 2%. Keep in mind LA has seen an increase in luxury condo buildings that sell for similar prices as luxury houses, so that’s playing a part in condo prices increasing.

Interestingly, the median sale price for houses west of the 405 decreased MoM, as did house prices south of the Blvd in The Valley. When in a changing market it’s common to see neighborhoods react differently. Despite the overall increase in prices, the median sale price is still roughly $100k below the highs of 2022. Will we see 2024 prices surpass 2022 prices? I’m not sure, and it appears neither are the experts, as I will go over further down.

Rates

Finally, we saw some good news for buyers and also sellers wanting to break their rate lock-in and move. Rates are the lowest they’ve been for the past few months. I had a lender quote a 10-year ARM in the low 6’s, which is fantastic news. If you were also to utilize a 2-1 buydown, that would put your first year rate in the low 4’s! As always, with interest rates, they’re impossible to predict, but let’s hope the trend continues.

What will 2024 bring?

So, the question everyone wants to know, and for this, I will deflect to the “experts.” Nationally, Realtor.com is predicting prices to drop 1.7%. Whereas the country's second-largest MLS, Bright, predicts prices to increase 1.5%. 

• Mortgage rates
• Realtor.com expects rates to average 6.8% and drop to 6.5% by the year’s end.
• Bright expects rates to average between 6-6.5% and fall to 6.2% at the end of 2024.
• Inventory
• Realtor.com predicts inventory will fall 14% YOY.
• Bright expects inventory to rise by 7.6% YOY.
• Home sales
• Realtor.com expects home sales to rise by 0.1% to 4.07 million next year.
• Bright expects home sales to rise by 12.6% to 4.6 million next year.

Personally, I’m on the fence about what next year will bring. On one hand, I feel 2024 will be much the same as this year. There will be very few homes to buy, with the overpriced or bad-location homes sitting and the desirable homes selling quickly. On the other hand, if rates continue to drop where they are consistently in the 6’s, I feel that will be enough to get a good number of buyers off the sidelines. There’s so much talk about prices rapidly increasing when rates are in the 5’s, there will be buyers who want to get ahead of that. However, the reality is nobody can confidently predict the market. So the same advice applies: if you find a home you have to have and can comfortably afford without creating a lot of stress, you should seriously consider it. After you buy the home, you can always refinance the rate, but you can’t renegotiate the price.

People are Still Leaving LA

Despite the pandemic relocation boom behind us, people are still leaving LA at a high rate. According to Redfin data, 19% of buyers living in LA are searching for homes outside of LA. The top area of choice is to move to Las Vegas. It’s not known what percentage of those made the move. However, Redfin also announced that 2023 was the least affordable homebuying year in 11 years, with California being one of the top states. San Francisco and New York were also high on the list of people moving to other areas.

Great News for Multifamily Buyers

Fannie Mae just changed the lending guidelines for owner-occupied multifamily (2-4 units) mortgages. Until now, a buyer would need to put down 15-25%. However, now a buyer only needs 5%. Buying a multifamily is a great way to get into real estate investing by living in one unit and renting out the others. The change also applies to renovation loans. So, if you’re interested in buying a property that needs work, there’s a 5% down loan for you, too.