A Great Market That Doesn't Feel Like One

Hello, hello, hello, and we are back all of the data points to a market that should be a really great real estate market. But it doesn't feel like it. Why not? We're going to answer that question today. Let's get started. My name is Steven Meade with domicile, real estate, real estate for people who love houses. And this is our whole market, Southern California market update for May 21 2024.

We have a lot of macro data that should suggest this is a great market to be in, especially if you're a buyer. But if you're a buyer out there, it doesn't feel like that. And it doesn't feel that way. For our buyers, either. We're going to unlock what's really going on behind the numbers, I want to go ahead and get started with the stats, because as always, the data really does tell the story, especially when you look a little deeper. So the first thing right is let's look at our active listings both under a million and over a million dollars, that one to 2 million.

These numbers are much better than we were we were seeing last year, this is the total number of available homes that are out there on the market. Now, if you're a buyer, I can already hear you screaming at the screen here. And our buyers are doing the same thing, right. One of the reasons why is they don't like a lot of the inventory, they don't like the prices of a lot of the inventory. I think, you know, if a home is perfect, and it is your dream home, you might be willing to go higher in price than you ever imagined to get it because it's what you really want. But What you won't do is grossly overpay for a house you don't really like and I think that's where some of the problems are hitting with some of this inventory. If we look at our new listings in the last 14 days, this again is some great news.

We're trending better than we were at last year with new listings, though it is starting to kind of subside a little and we're seeing that. But it's really that one to $2 million category that is almost a 50% jump in new listings and what are these new listings, we're actually seeing some more out of state travel is starting to happen and people were cashing in on those chips and going to another area. And I think part of that might be the result, right of different markets in different states. So for example, the Austin Texas market, which is start historically been red hot, that market is in a slump.

So as you might imagine, if you're a buyer here, look, if you're a seller looking to relocate inside a company, you could say, well, I can get top dollar for my house here. And I can get a screaming deal in Austin because their market is softer. And if we look at our new escrows those numbers are again better than they were at last year for our one to 2 million category about around where they were at last year in are under $1 million category. Both are trending down slightly. I think that's a short term thing. We saw some interest rate relief and I bet that's going to bump up in two weeks when we run these stats again, we look at our absorption rate though, for under a million dollars.

That's pretty low here and that low 70s and we have dropped into the low 60s on our one to 2 million. That indicates that again, we might be seeing some different market forces happening in the almost exclusively first time buyer under $1 million dollar price segment. That's different than we're seeing in that one to 2 million and we don't break this down here but anecdotally, I will tell you, I think that we're even seeing a pretty big difference between one to $1.5 million and $1.5 million to $2 million dollars. I think there's definitely a big difference in those two price ranges. If we look at our closed prices, right remember this is taking a look backwards in the rearview mirror by 30 to 60 days.

We do see there is an upward trend the spring right I think everybody can see that across all price categories. It's a little bit soft here but I'm telling you I think that is a result of this looking at the data from over a month ago. If we look at our percent still active again we're going to after 14 days remember if this is higher, that indicates a lesser competitive market. And while both of these are higher than they were at last year, what I think is interesting is that the shape of these is different. Look at how that one to $2 million is shooting up. The under 1 million is not that really tells you a lot about how these different price ranges are having a diverging set of dynamics. So if you're a buyer, your strategy really depends on what price range you're looking, I'd say if you're looking in the one, anything up to a million dollars or into the low ones, that is still a very competitive market, especially for single family homes.

If you are above that it gets less and less competitive than I think once you hit on $1.5 million, it actually gets a bit easier. However, I think this is interesting, look at our list to close or close to this ratio, right, we are still seeing that on average, homes are still selling for over their list prices. And in fact, over 101% of their list price isn't over 102% for that one to 2 million categories. So it is still the norm that asking price is just the starting point. As a personal aside, it has been this way in the Bay Area Real Estate market for years. I hope this is not a new normal where people just intentionally underprice houses.

And the expectation is that of course, you'll be paying a bit overpriced over list price. I like it when people price right where they think the house is worth. But, you know, expecting honesty and transparency in the real estate market might be expecting a little bit too much. If we look at our days on market for new contracts, we see that if you're under a million dollars, that is still well below 30 days, and if it is one to two, that number is starting to rise, that's not unusual, we do normally see that that one to $2 million market moves a little bit more slowly.

That was kind of an anomaly there. But definitely again, another indication that there was a tale of two markets. And then finally, we look at our affordability index, we see some interesting things happening, right, the payment Index rose and then fell, you can see it kind of jumping back into the frame here. And the market rents are starting to go up again, maintaining that sort of like to box segments here, range on this. And finally, if we look at our prevailing mortgage rates, those have started to turn a corner, I do think some of that macro economic news that is coming out, we're finally going to start seeing, you know, probably not a steady or a straight path downward. But I think we're starting to see that downward path happen.

And realistically, when we take a look here, we're not that far off where interest rates were a year ago. So what does this mean, right? If you are what does this mean? If you're a buyer in this market, why does it not seem like the market is easing up. And I think there are really two factors here at play. Number one is price segment. We've we know the stats of who's watching our videos, most of you are in a price range between $700,001.4 million, that seems to be a sweet spot where most of our viewers tend to be that is the most competitive edge enter the market right now. That is the market that has the least abundance of inventory. The same time, we're also noticing that there is buyer concentration, which is something that we've talked about in the past, what is buyer concentration, that's when 90% of the available buyers are going after 10% of the listings, right we're seeing that concentrated effect.

When there's a hot house that looks great and pictures online, it has gone within 48 hours for way more than list price, or it is a long drawn out highest and best type blind auctioning process. Neither of those is particularly attractive. But this is an opportunity. I think that some of our entry level buyers are missing. And that opportunity is looking at those homes that are not getting all of the attention.

They are out there. Those homes do exist, and you do have those opportunities. Anyhow, that's all I've got for you this week. Thank you so much for watching. Questions, comments. Absolutely. We love them. Don't leave them out. We'd love to hear from you. If you are a buyer or a seller, you're in Southern California, and you'd like to work with us, for our representation to represent your needs and interests. We would love to chat with you definitely reach out there's some information on how to do that below in the description. And don't forget to like subscribe and hit that notification bell. We will see you again real soon.

 

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