A Seismic Shift For Buyers
Well, hello everybody and happy Tuesday. This is our Southern California First-Time Buyer Market Update, my name is Stephen Meade I'm your host with Domicile Real Estate, where we are on a mission to help California's renters become homeowners. And, you know, it's funny, we base our statistics, and we kind of do a presentation based on what's happened over the last two weeks. But the reality is, it's probably the last two days or so or two business days or so that really are going to have, I think, a significant impact on the landscape for first time or entry level homebuyers in Southern California. So let's go ahead and get started.
And I'm going to kind of pepper in some of that news. For those of you who don't know what I'm talking about. The big news here is that a couple of economic things have happened in the last two days that are really upsetting the market. One of those is the CEO of JPMorgan Chase, Jamie diamond said prepare for rates to go significantly higher. And the second thing is a opening a job openings report, that is unfilled positions that came out this morning economically was considerably higher than anyone expected. Lots of job openings mean an economy that is still growing too quickly.
And there are not enough workers to fill those positions in when that happens that basically, this is kind of realigned a lot of economists into thinking that we're going to see these higher rates for quite a bit longer. And they may even go significantly higher from where they are, we've already seen some results of that with mortgage rates, basically jumping in the last two days. So let's talk about what that means. And what's funny is, as I say this, this all sounds like bad news, but it but it isn't really and I'm going to tell you why, at the end of this video on why it's important to understand that news is simply news, you simply develop the strategy that takes advantage of the conditions that you have.
So let's go ahead and get started here. We're gonna go through and I'm going to kind of pepper in what I think's going on and how this really affects you. Right. So first off, let's take a look at our closed prices here. And you'll notice that we're pretty much flat on our entry level single family homes. And I think we're going to see that continue to be flat like this. And if you notice, you're on our entry level condos, they kind of dropped in and they bounced back, I think we're gonna see this number really kind of rest in this mid 500 zone for a while. And the biggest reason why I think that is because, you know, we've definitely got a bit of a scarcity situation in terms of inventory going on.
But I think especially in the next maybe 30 days or so maybe even 45 I think if this rate jump is not a blip, we see this pattern that tends to happen in our market. Whereas if rates take a jump, a lot of would be buyers kind of freak out for a second. And that pretty much halts any price increases that we're seeing and kind of just slows everything down. Obviously, if you're a first time homebuyer, you know this is going to be painful, you may find the home you qualify for last week you no longer qualify for. But the flip side is you also may find that the home you write an offer on expecting you'll be competing against five other people, you may not be competing against anyone else on that home, when you write that off for this week.
So kind of a situation if you're a buyer and keeps finding that you're getting priced out not because you can't afford anything but because it can't get an offer accepted, this really could be this next 30 to 45 day period could really be a good thing for you. So if we look at our monthly payment Now bear in mind, this does not take into account, these very recent interest rate jumps. You know, we're kind of heading into high watermark here at $6,300 for entry level single family home. Again, that is a three bedroom two bath with 5% down including mortgage insurance taxes, et cetera, across Los Angeles and Orange Counties.
That is kind of a new high water market right for that entry level single family home. And our entry level condo is 4907. That is not a high watermark. But it is close to it. And this again does not reflect pretty much the last two days were really the mortgage markets been beaten up pretty hard. If we look at our minimum household income required, and we see those numbers dipping up not quite a high point but getting close to it. And if we look at this absorption rate, this is one that I find kind of fascinating, right? For our entry level single family home. We're still treading in this 84% zone. I do think that might fall a little bit like I said it's kind of this reaction to higher rates. But that's still a very competitive market but look at what's happening. On this condo front, that condo market is in fact getting less and less competitive.
So if you are a buyer that's on the fence, you may want to adjust your strategy. Remember, we talked about? There's not really, you know, this news is not really good news or bad news, it's just news. And you have to adjust your strategy to take advantage of the information you have. And I think, as a person who's out there, I think I think there's a lot of solace that comes from that, right, when you kind of take some of that emotional aspect out of it. And you say, Look, these are simply the conditions present, what is the optimal decision making for those conditions that are present. And you know, right now that that optimal decision making may actually be buying a condo instead of buying a home at the moment, so you know, just something that we're seeing out there something to start thinking about.
If we look at total inventory, this one is also interesting, too, we're seeing that inventory rising just a little bit and normally around this time of the year is when it starts a falling or at least kind of peters out. And I think this is another telling thing. I mean, I still think we're very inventory constructive market. Look at these numbers, where we are, it's still way less than last year. At this time, which was not exactly a high inventory market, either. But you'll look at these minut things and try to figure out how is that going to affect demand and competition. Excuse me there. If you look at our 14 day, still active percentage, you'll notice that reason a little bit for that entry level condo, and it started to bounce back up for our entry level single family home, I think we're going to see these numbers go up a little bit. And then finally, we've got our weak supply of homes, right, and this is our relative inventory. And that actually has jumped a decent amount, right? It's gone from four condos, we are at nine, approximately nine weeks of inventory, that is about where we were at a little bit less than last year.
So if you kind of miss those fall days, when you know, when you could write offers and get things accepted, I think especially on that condo front, we're going to see that coming back. So on our single family homes, you see that inventory went up, again, not by as much per still well below where we were at this point last year. So again, you know, if your strategic choice, maybe your choice before was trying to do whatever you could to get into a single family home, even if it was a crappy area or a tiny house, you know, now I say, maybe take another look at those condos, because I think you're going to find your market powers a little bit better.
And you might want to shift to a strategy of eventually turning that condo into a rental home down the road at some point, that might be a better strategy for the market conditions that we're seeing. And I really believe that we have had a bit of a tectonic shift. In terms of economic projections. I think, leading into this week, everybody was saying that the Fed had maybe one more rate increase in them. I think if we see some other corroborating data like these job openings, data that says it's a stronger economy than anybody expects, I think if we see out I think the Feds going to be reluctant to stop those rate increases, and they're going to keep going. Obviously, stay tuned.
Our next video will probably have a little bit more information on that front with how the markets are reacting. But just kind of looking at the way the markets have reacted over the past few days, especially the bond market, which is what determines mortgage rates. The expectation among the markets is that we're going to be in this high interest rate market for a while longer. If you are a buyer, this might be a chance to take advantage of that panic moment that buyers have where you will momentarily have less competition. If you're a first time homebuyer without a huge downpayment.
You know, I would say not only our interest rates are enemies, but sorry your fellow buyers that there are way more buyers out there than there are homes. If there was a pause and demand. If the buyers take a break, this is your chance to swoop in. All right, that is all I got for you today, October 3 2023. I can't believe it. If you or someone you know should own a home in Southern California would like to own a home and it's never too early to chat with us to work on developing a strategy to help you do that. Don't forget to like subscribe and hit that notification bell and we will see you again real soon.