SoCal home sales slow dramatically, BUT GLIMMER OF HOPE

Fresh off the heels of The Real Deal LA Forum held Sept 21 at the London Hotel, where we discussed all things real estate, I wanted to share some market insights on the ever-evolving LA real estate.

Sales across the Southland are 32% less than the previous 12 months and the Fed took a pause in raising rates this month.  But despite a slower market with inventory levels at historic lows and higher interest rates, the $2M to $3M LA housing market is strong. Prices have come down in the higher-end luxury sector of the market with many buyers sitting on the sidelines. But there has been a renewed group of motivated buyers who have accepted current rates and are going after the $2M to $3M properties which are often receiving multiple offers and going above asking.  So with the right agent and an effective strategy, you can position yourself for success to secure your dream home.

That being said, normalization in the markets across the board will happen when rates go down 200 basis points (to approximately 4.5% - 5%).  Experts estimate this to be anywhere from 18 – 24 months down the road. The good news for now for now is that Fed left rates unchanged and kept interest rates on hold, but stayed open to another increase this year.

This stalemate in the markets, has driven up the leasing market which is over saturated.  Homeowners with 2.5 – 3%  interest rates don’t want to sell right now, so they are putting their house up for lease instead.

THE REAL DEAL ARTICLE: 271,800 homes sold in the 12 months through August, 32% less than the prior year

The pace of home sales across Southern California has hit bumper-to-bumper traffic.

Source: THE REAL DEAL (Getty Images)

High interest rates geared to cool inflation and stubbornly high home prices have put off buyers, according to the Daily News. The median home price of $859,800 last month, the third-highest on record, is up 3 percent in a month and up 3 percent in a year.

Southland buying is off 32 percent, followed by 30 percent slower sales in the Bay Area, Central Valley and Central Coast, with the state’s northernmost counties off 29 percent.

A smaller pool of buyers are vying for fewer homes, as many potential sellers would rather stay put than trade up and be stuck with higher rates.

The association estimates California’s supply of homes to buy is equal to 2.4 months of sales for August. 

That’s off 4 percent in a month and down 14 percent in a year — and 58 percent below the 33-year average, according to the newspaper.

The affordability index for the second quarter showed only 16 percent of households across the state could qualify to buy a typical single-family home.

The 30-year fixed-rate mortgage averaged 7.1 percent  for August — up from 6.8 percent in July and 5.2 percent 12 months earlier. 

A potential buyer for a nearly 860,000 home with a 20 percent down payment and a loan at 7.1 percent last month had a $4,610 mortgage, up 6 percent in a month and up 25 percent in a year. 

Since February 2020, the estimated typical house payment in California has risen 122 percent.

— Dana Bartholomew

Source: The Real Deal