Chief Economist Jordan Levine from the California Association of Realtors offered the following real estate insights on Nov 18th. We have summarized it for you and added our local market commentary.
•Sales volume to contract more than prices. Many own their homes outright or have mortgage interest rates under 4% so there is no incentive to move
•Longer to market time to sell with demand from fewer buyers
•Market will be less competitive as buyers adjusts to new rates. Prices will come down a bit as well
•No major foreclosure crisis so inventory will stay tight and will prevent a major deterioration in price
•Inflation likely to persist
Implications for Buyers
•Less Competitive Market. Buyers with loans can compete again and expected fewer multiple offers
•More Homes For Sale which means there is choice again
•Long-Term Ownership Benefits especially as a hedge against inflation. In addition to regular buyers, investors are coming back into the market as eviction moratoriums expire and trends point to more renter demand and higher prices. Vacation and second home demand holding up. Many view as a hedge against inflation if they can afford to buy now.
•It’s Not 2008 All Over Again. 98% of mortgage holders current on mortgages, most new borrowers had credit over 720, verified income & equity.
•Mortgage Interest Rates Are Up. Cost of waiting could be more costly as rates increase
•Purchasing Power Down by over $250k with higher rates
•Economic Uncertainty does impact overall sentiment
Implications for Sellers
•Still A Good Market, just normalizing after the frenzy of last 2 frenzied years
•Homes Still Selling Fast. Average time on market currently in Hancock Park is 45 days
•Home Prices Remain High. The average price per square foot was $920 in the last 6 months in Hancock Park.
•Many Selling Over Asking. 38% in of all sales in Hancock Park in the last 6 months closed above the initial list price.
•Fewer Buyers In Market
•Homes Sitting Longer. Pending homes averaged 45 days on the market while the average time for the last 6 months in Hancock Park was 27 days. Active listings are averaging 64 days on market today driven by the number of homes available over $10MM.
•More Discounting/Concessions. 6 of the last 13 properties under contract in Hancock Park has price adjustments off the original list price.
We at the Loveland Carr Group are here to offer context and perspective to help you make the most informed real estate decisions for your family. Experience and wisdom are invaluable to strategically position you for success. Creativity and intelligence will be needed to customize the best tools and tactics for each unique situation. Put our decades of success to work for you!