It Gets Better - FTHB Market Update
Well, hello, everybody and happy Tuesday. If you're watching this after Tuesday, which some of you might be on YouTube, that's cool too. So happy whatever day it is, summer is finally arriving. And that actually means a lot more than just in terms of the weather outside, but also relating to the real estate market. My name is Stephen Meade. I am the head house geek here at Domicile Real Estate, where we are on a mission to help California's renters become homeowners, this is our entry level market update. So we do do a Southern California Housing Market Update that is for the whole market.
This one is directed specifically towards entry level properties, which is a little bit different than I know a lot of the other things that are out there. So let's go ahead and get started. I actually have some good news to share with you if you are a entry level or first time homebuyer. Let's go ahead and get started. So the first one is pricing. And I want to talk a little bit about some of the comments that we had, you know, maybe about a year ago, we had some people saying they thought that they were going to wait. And, you know, you might think that that was a totally bad decision because rates went up and it is true rates did go up. But if you were waiting for a little bit of price relief, you actually have gotten it right. And looking back here today, our entry level single family home in LA and Orange Counties, this is a three bedroom two bath and is $735,000. Now, what is the entry level mean? To us, the entry level is the first quartile. So that is halfway between the median and the lowest.
So kind of a quarter way up the ladder. If you were to draw kind of a scale, three bedroom, two bath houses a quarter of the way up from the cheapest to most expensive is $735,000. For and if you look back here, you know where were we about a year ago, we were in the high sevens to low eights. So it's definitely an improvement over where we were last year. It's a similar story on our entry level condos, which is two bedroom two baths now, interest rates have gone up. So what does that so what does it really require you to earn in order to or what is your monthly payment gonna look like on one of these hypothetical properties. We did this based on 5% down including mortgage insurance taxes. And we ended up at 5674 per month for our entry level single family home and 4431 for our entry level condo, these numbers are suspiciously similar to about where we were a year ago today.
So the reality is that, you know, your your buying position has not deteriorated nearly as much as you thought it was. However, there was something very good about buying a house today versus buying a year ago. Rates are a bit higher than they have been. Right now, the great thing about higher rates. And by the way, as an aside, anyone who is claiming to predict interest rates with any degree of accuracy is lying, they are just guessing. You know, maybe they're even educated guesses. But historically, people have usually been wrong about interest rates more often than they have been, right.
But there is one thing I will tell you about interest rates, that is practically a certainty. And that is that they are volatile, and they change. So if you are a buyer who buys when interest rates are relatively high, you are locking in your purchase price, but you are able to take advantage if rates do go down at a later date, which may spur higher prices. So I would actually rather have prices that are the same or a little bit lower and higher interest rates than I would have lower interest rates if I were a first time buyer, because I know I may have there's a very high likelihood that I will have an opportunity to lower the payment and have a lower housing costs on the same house in the future. So going back here, if we look at what is the minimum household income required, if you have no other debts to afford these payments for our entry level single family home that is $139,000 or $108,000. Again, that is shockingly similar to where we were about a year ago for these entry level properties. If we move on here to our absorption rate, we get a little bit of relief. Both of these numbers are fairly close to 80%. What does that mean? Well, basically this is a very quick and dirty way of saying this is a market that is brisk, but it is not necessarily crazy. And I think one of the effects that we're noticing we've mentioned it before is that the entry level market is very, very suspect.
Double two interest rate shifts. So for example, if interest rates go up a little bit, we see demand pull back at the entry level. And I think if you're a buyer, you can use that to your advantage, right? Because that's going to be the time when you're going to face fewer multiple bids on properties. If you look at our total inventory, we've got some other good news. You know, if you're in our condo space inventory has now reached right about where it was last year with a little bit of an IP talk uptick. Our entry level single family home inventory is still trailing behind. But finally, this is moving in the right direction, we're finally getting some additional inventory coming into the market, I still think we're going to be not as good as we were last year in terms of inventory. But we are getting better, you are better off now than you were a little over a month ago, we're at a low point for inventory available. If we look at our percent still active, this is a little bit more competitive than last year, it's a little bit more competitive than we were kind of through the fall of last year. But it's holding steady, you know, this number isn't deteriorating. And I'm going to call that a win if you're a first time buyer. Finally, we've got our weak supply of homes. And this is kind of a number that's a little surprising, but it shouldn't be we've seen the relative inventory, which is what this is measuring, tick up. So this measurement here is absolute inventory. Right? This is just a number of three bedroom, two bath homes that are active on the market in LA in Orange County, or the number of two bedroom, two bath condos.
This number is relative inventory. So this is based on how fast homes are currently selling. How many weeks of inventory do we have? And you'll notice we're up to four and a half weeks or so on our entry level single family home. That's a little bit of an improvement in 6.4 weeks on our condos. I think those condo buyers are even more affected by interest rate increases, then our single family home buyer so I'm not entirely that's not wholly unexpected. If you look back through here back through last year when rates were going up we saw a similar effect right that the condo market saw those that relative inventory grow more than the single family home market despite the fact they started at the same point in terms of inventory about this time last year. Anyhow that is our Southern California Housing Market Update.
If you are looking to become a homeowner if you're currently a renter, or you know someone who is currently a renter and shouldn't be, it is never too early to chat with us. We would love to lend you some of our expertise, you can definitely reach out to us via Youtube, Facebook, or our contact information which is in the description. Questions and comments. We do love those do not forget to like subscribe and hit that notification bell. We have also started a new podcast which we're going to upload video on that we are doing with a another real estate broker. She is way prettier than me and just as smart. I think you guys are really gonna like it. We're working on that and we will see you again real soon.