Didn't See That Coming

Well, hello, everybody, our internet's actually down here in the office. So we're using cell phone tethering. So I apologize if it's a little bit jerky, and you're watching us on Facebook. You know, it's not often that we really get to break one of those kind of old school rules of real estate. And I think this is something we didn't really expect to happen. And that old piece of wisdom, right, is that you know, whenever you're in a market that is getting trickier, it is the condo market, but it's going to suffer the most.

Now, in all fairness, that has been a little different the last couple of years, right, we've actually seen our, we've seen buyers making a shift, especially in the Southern California area, towards condos. By the way, we've got a great show for you everybody. My name is Steven Mead with domicile, real estate, real estate for people who love houses, and where we are on a mission to help California's renters become homeowners. This is our Southern California first time buyer market update giving you information to help you make better decisions. So let's go ahead and get started.

And we're going to go through the stats and I'm going to tell you exactly what it is I am talking about. So here we are looking at prices, right and I want to share with you two things that are very important to remember right now in particular, first thing is take a look at this in our entry level single family home market. Great prices a little on the soft side, right like we're seeing a little bit of softening. But what's happening down here in our entry level condo market. By the way, just as a reminder for everyone, our entry level condo is a two bedroom, two bath in Los Angeles and Orange counties, and we take the first quartile. So this is basically the midway point between the median and the cheapest, right. So this is meant to approximate an entry level homebuyer.

Look at where we are at on price point, we have hit a new high in price down here for that entry level two bedroom, two bath condo, kind of besting our previous high by about $2,500. Definitely not what I would have expected, I think in the fall, I would have expected the opposite, I would have thought that our entry level single family home market would continue to rise. And we would see the condo market soften a bit. And by the way, this is not just showing up in prices, we've got some other data as well that kind of supports this conclusion. So where are we at as far as affordability goes, but we're actually in a better place than we were especially if you're a single family home buyer.

And what's crazy to me is watching these numbers start to come together a little bit because our condo number for our payment went up. And our entry level single family home up market has gone down, bringing these two closer together. By we've had a little bit of relief on the interest rates. I think that's some good news for buyers, not maybe as much relief as you were hoping for. But it's something. And just as a reminder, this is the total monthly payment based on 5%. Down, including mortgage insurance, taxes and HOA fees. So this is really meant to give you a true payment number for a person who does not have wealthy parents coming in which 2030 or 40% down.

This is based on 5% down, we see we're at about $5,200 here for our entry level condo. And we are at about $6,100 I think or 63 $6,400 here for our entry level single family home. Now if we look what is our minimum household income required to make this purchase that has climbed to $120,000 for our condo buyer, and it remains at about 150 for our entry level single family home buyer. And if you take a look here at our absorption rate, both of those show a little bit of a strengthening market, right our entry level single family home with a 74% and our intro the condos bouncing off a bottom here they were in a bit of a trough in the 60s for gosh, almost two months straight and they have bounced back as well. Very interesting to see that at this point in November.

And then if we look at our total absolute inventory, right. The real story here is one that we've seen in a couple other spots and that is normally if you look here, look at the shape of this curve in November last year. I mean, this was inventory was dropping. Right Now admittedly, there was a lot more inventory to start with. We are flat on our entry level single family homes and very slightly down on our entry level condos.

The other part of this story though, is to put this in perspective is look at how much lower that inventory is this year versus this point. Last year, I mean, this is Gosh, these numbers are down, basically about almost 50% in both categories versus where they were last year, that may actually be stunting some of the sales. Now, if we look at our 14 day still active percent, remember, this is kinda like a wind sock, it kind of tells you what direction the wind is blowing. When you see this number going down, it means the market is getting more competitive. When you see this number going up, the market is getting less competitive. So you'll see for last few months, we were kind of in this point of high competition, and then it kind of eased off as we went through September and October. And now it looks like it might be getting a little more competitive again.

Finally, we have our relative weak supply of homes. And we have something interesting again, happening here. Look at this red line with the condo figures, relative condo, condo inventory has dropped from a little over 10 weeks to right at 10 weeks of inventory, relatively speaking. And then here we've got our anchovies single family home actually went up and relative inventory but only a little bit from just seven and two thirds to about seven and three quarters. Not really a big change in relative inventory. Just as a reminder, right relative inventory is the amount of homes we have referenced to the rate at which homes are going into escrow. So it kind of tells you if no new homes came on the market, how many weeks would be happy for all of our all of our inventory was depleted.

Kind of an interesting result, not really something that I would have expected. For this time of year I would have thought the condo market would have been a soft one and it would have been the single family home market that was kind of having a bit of a strong finish to the year. The question is, you know do we think that this condo market is a leading edge right of a trend meeting that we think those single family home market is going to follow in two weeks we'll have to see. But definitely a very interesting result. Normally that is not the case. Normally between the two markets. It is the single family home market that always shows the strength and it is the condo market that is always weaker, relatively speaking, but not this week. Fascinating stuff. Thanks for watching with us.

We love doing these videos, questions and comments. We love them. Don't forget to like subscribe and hit that notification bell. And if you or someone you know should be a homeowner in Southern California pretty much if you are watching this that is you definitely reach out to us. We would love to lend your our expertise in helping people get into their first home. It is something we are experts at. I don't think anybody does better. We'd love to hear from you. Have a great day everybody. We will see you again real soon.

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