Back to May 23
Well, hello, everybody, and welcome to another Southern California Housing Market Update. My name is Stephen Meade with Domicile Real Estate, we kind of got our December winter clothes on here, it's gonna be a rainy day, I think in Southern California. This is our last full housing market update of 2023. So a little bit of time to reflect on the year and to really kind of take stock of where are we at. And we've kind of got some interesting news for you, as per a lot of our predictions, the last couple of weeks, we are starting to see the results of these dramatically lowered interest rates, we're starting to actually see those affecting the market and kind of coming through in the numbers. So let's go ahead and get started.
Where are we at at the end of 2023. And then at the end here, we'll talk a little bit about where we think we are going, let's go ahead and get started. As always, if you're looking to buy or sell real estate here in Southern California, namely Los Angeles and Orange Counties, we would love to lend you our expertise. So let's go ahead and get started. So first thing here is kind of looking at our active listings, right? And where are we at in the market? Not only where are we at? Versus earlier this year? But where are we at versus last year. And so let me get our pointer here.
As you can see, inventories falling that's not really that unusual for this time of year. But what I think is noteworthy is versus 2022. We are down and this is kind of in the same story all year. I think 2022 was actually a pretty good year for buyers in terms of having selection. I think we actually may have mentioned that several times. You know, and we're really seeing those numbers kind of take a nosedive. But there's another reason for this kind of happening. And kind of some good and bad news. So we're going to talk about that in the next couple slides.
First, some good news, right? Historically, what happens towards the end of the year, number of new listings hitting the market absolutely takes a dive. And while this year, we are seeing that number reduced, there's something interesting happening, we are already seeing a little bit of a hockey stick. And I'm going to talk about what I think is actually going on there. So I think we have kind of an unusual situation heading into 2024. I think we have a lot of pent up demand demand from people who may have bought a condo a few years ago, they have equity. But the problem is they also have a very low mortgage rate, and then makes it very hard to move.
I think with these rate reductions, that is changing that fundamental calculation, for a lot of would be move up buyers. And they're actually thinking of putting these under $1 million properties on the market. And look at what is happening. We are seeing exactly that in the lubber of new listings is actually going up in the last two weeks of December. That is pretty unheard of, really historically, and even in our one to 2 million category. Look at this, it normally takes a nosedive. It's already pulling out of that nosedive, and we're only on the 19th of December. If you notice here, we didn't really pull out until the new year.
Right when new listings hit the markets. I think it's interesting. We're starting to see that result early. Like I said, I think this is an indication of some changing consumer behavior. And if we look at the new escrows, this is the part that maybe is not such great news. For those hoping to not have such a tight market that is already hockey stick wildly. Right as we watch this completely rebound. And normally look at the direction of this chart. Normally towards the end of the year, it's normally heading straight down to hitting a bottom around the new year. And we have already hockey stick to this new escrows.
And I think what's happening is there are a lot of buyers who are sitting on the sidelines. And they are saying, hey, the rates are suddenly favorable, we've got to do something, right, we've got to absolutely do something and make a change. So I think that's what we're seeing in these numbers and our absorption rates. You know, this really reflects that we've kind of seen this as being a little bit of a of a building issue towards the end of the year. And now they're rising up. That's not that unusual towards the end of the year because buyers tend to still buy and sellers, especially that week between Christmas and New Year's, they tend to not put their homes on the market this year may actually be an exception to that rule.
The buyers are definitely out there in full swing. And that's what's producing these absorption numbers towards 100% meaning and for every home that comes onto the market in the last two weeks. One has gone off the market and found a buyer I mean I think that's pretty incredible. And I think this is more than just a holiday blip. I think really this is a fundamental shift in the market which has happened in the last few weeks. Next, if we take a look at our closed prices, this one, I think, remember, this data is four to six weeks old. So you have to bear that in mind and understand your this is a snapshot of where the market was four to six weeks ago, right.
And it was heading into a typically soft, kind of December, right that that Thanksgiving era, that's typically a soft time of year. I think these are going to reverse around, give him a couple of weeks, you're going to see what's actually going on the market, we're hearing about multiple offers, right? Again, multiple offers a week before Christmas, just think about that, folks, that kind of tells you what state the market is at. It means if you're a seller, you should be thinking about preparing for next spring. And if you're a buyer, I don't know who's telling you to wait.
But it's bad advice. Right now, I don't see your situation getting any better in the next six months. Now, if we look at our kind of our secondary measure, right of market competitiveness, remember, down lower numbers equal more competitive market, look at this dramatic change, right, we were kind of heading up towards the end of the year indicating a softer and softer market. And boy, do we do a 180 and change directions quickly heading into a more competitive market. Again, this is starting to look like our level of competition, you know, Gosh, darn back in back in September and have some or level of competition or, you know, kind of in that early spring level of competition, so not quite the heat of it.
But gosh, this makes me wonder what January is going to look like. And then if we look at our close to list ratio, hovering right around 100%, I think you're gonna see this, again, is based on data that is four to six weeks old, you watch this number, we'll be back up here, probably by our next update, we're going to see it over list price again, that's what we're hearing out in the field that's we're seeing and that is my expectation. If we look at our days on market, this is another one that's kind of interesting. You look at where we are versus last year were way lower. You know, it's been steadily heading up for under a million dollars.
But even that's leveling out and look at what's happened up here, kind of a rather dramatic rise and reversal, right in this one to $2 million category. I mean, things went up. And now that days on market is coming back down, again, indicating a more competitive market. You know, I'm gonna go share here for a second, we use multiple data points for the same thing. And it might seem like it's repetitive, but it really isn't right, because what this does is it increases our confidence level in the data that we're receiving in in the indications that we're seeing. So if we've got three sort of arrows, right, that indicate is the market getting more competitive or less competitive, and they're all pointing in the more competitive direction?
Well, there's a pretty good chance the market is getting more competitive, right? We're not imagining things, it's the reality, that's what's happening. So when we see kind of this level of data, I mean, this is really a clear indication of what's happening. And, you know, we titled this video, you know, going back to May, and there's a reason why we're calling it that, because look at where we are in our three way chart here. Again, as we expected, rents rebounded quite a bit here, as we figure but the real story here is that payment index number look at how these are heading close together again. And this is really what we watch, when, when this rent on a median family home and the payment index get very way out of whack.
That is kind of an unstable market, it's a market where we start to be concerned that something's going to have to give it can't survive forever like that. As we see these coming close back together. Again, a lot of it fueled by this payment index coming down due to interest rates, look at where this number is. This is back where we were, gosh, you know, maybe back where we were in, in May of this year. So if you're a buyer out there, this is really windy back to the clock of affordability, you could afford what you could afford back in May of this year. So if you feel like you missed your chance, don't hesitate. Right. I mean, now is your chance to kind of go backwards, we don't get that very often in the housing market to see these numbers come down. Finally, we have our prevailing mortgage rates, they are actually a little bit lower than this. I think, in my opinion. I mean, we're seeing stuff really in the mid mid to low sixes.
And if you're a jumbo rate, if you're willing to take an arm, we are seeing stuff dipping into the five. So that's right rates in the fives are still in fact, possible. So what does this portend for 2024? Right, if this is what we're seeing in December of this year, and you know, if I'm a seller, I think you actually have a pretty bright future as a seller in the next six months. I think it looks like if these rates hold out we're gonna have a very strong spring I think demand will outpace supply. Obviously if you're a seller, that's what you want to hear.
Now unfortunately, if you're a seller who is also going to be up buyer, right? Because you're moving up, you're moving down, you're changing what your needs are, you know, you're gonna get a great price for your house and have people fighting over it, and you're gonna struggle to get offers accepted, right? So it kind of works both ways. If you're a buyer, you know, out there, if you if you don't have anything to sell, you're just a buyer, you've been sitting on the sidelines, I don't really see a lot of upside on waiting. I think the upside is rates continue to go down further, right. That's great news, you can afford more, I think prices are going to start offsetting that. I don't think your net situation is going to improve.
Whereas if you do something like buy right now, and rates do continue to go down where you will be able to take advantage of that lower interest rate. But you'll have the loan balance of today's prices, not the loan balance of April 2024 prices right which my guess is will be higher than they are at today. That's typical spring number one December, January, usually the best times from a price perspective all year long. But also just because I think we're entering into that era when there will be a lot more buyers than there are sellers in the marketplace, especially if these rates continue to go down or even if they stay where they are at today right now. Anyhow, that's all I've got for you.
Obviously our next update will be a first time homebuyer only market update and that will be after Christmas. So Merry Christmas. Happy holidays, everybody. If we don't hear from you, obviously we are never too busy for your real estate questions. So we are here working, it's turning out this is actually going to be a busier time of year for us. Stay safe everyone stay dry for here in Southern California. And we'll see you again real soon.