Posted by Stephen Meade on Tuesday, December 12, 2023 at 6:08:51 PM By Stephen Meade / December 12, 2023 Comment
Hello everyone and Happy Tuesday. This is Stephen Meade with Domicile Real Estate, where we are on a mission to help California's renters become homeowners. This is our first time buyer market update, it is our second to last one of the year and kind of some interesting things are happening. You know, typically, this is the slowest time of year. And I always tell this to buyers, because I think if you're a serious buyer, now is when you are going to get the best deals. All year long, pretty universally, you have the least amount of competition and the most serious sellers. However, this year, we've had something interesting happened. And that is we have seen a rather dramatic reduction in interest rates, pretty much from the middle of November on until now or actually maybe even the beginning of November.
So what does that do in our market? What does that mean? For 2024? I recently saw a meme that said, the only bad time to buy a house is later.
And while that's not necessarily true for everybody all the time, I think some people it is just not a good time to buy a house. And I think when you work with a professional that actually wants to develop a strategy and a plan for you, you'll go over when really is kind of a great time. But with that said it does make you wonder what's kind of the over and under on waiting until 2420 24? And what does this mean, when we have this kind of results? So we're going to dive in, we're going to take a look. And we're going to kind of talk about answering that question. You know, what does this look like for 2024 based on what we're seeing here in December 2023. As always, if you are looking to become a homeowner here in Southern California, or you know someone who should, and I feel like that's every single one of you know, at least one person who should absolutely, we would love to work with them and love to hear from you or get your referral. Let's go ahead and get started. So if we come in here, and we kind of take a look at where our slides, so go back to our beginning here. So first thing, this is kind of an interesting one for me, and that's watching.
Watching our single family home and our condo prices moving in opposite direction. And you know, if you look here for single family homes, you kind of see this kind of start and stop.
And I mean, really, it's it's kind of been a little steady decline. But the fact is, look at where we are, versus the beginning of the year, you know, the beginning of this year, we were back, you're kind of in this $718,000 neighborhood, and now we are at 790. So if you had waited from earlier this year, that probably proved to not be the right decision. If you were merely trying to time the market. On the condo side of things, it's it's really kind of interesting, we're still ending at a price that's up, but not nearly as dramatically. I mean, honestly, we've had this really over the last month, we kind of hit a peak number, this is too big of a drop to say that it's nothing. And you know, my theory on this is that I think the condo buyers are a lot more interest rate sensitive than the first time than the entry level of single family home buyers. And both of those are more sensitive than maybe that move up market to interest rate. So we find that these higher interest rates affect different buyer groups differently. And I think you can see that in this chart here. We look at our total monthly payment. You know, we're here around $6,500, we are well off of our peak.
And if we look back to kind of where were we last year, we were kind of in that sort of, you know, $5,400 neighborhoods, so it has gone up about $1,000 over this point last year for that payment on a median priced home. And just as a reminder, two things about our statistics one, these are based on Los Angeles and Orange Counties, which is where most of you are located. Though, to be honest, San Diego is not drastically different than this. And neither is the Inland Empire right now. And then the second thing is, what are these entry level single family homes? Well, these are three bedroom two bath homes, we take the 25th percentile which is halfway between the bottom of the median and this is based on 5% down and includes mortgage insurance taxes and an HOA in the case of our entry level contest, we're really trying to give an accurate look of an entry level person who does not have a huge downpayment. We look at our minimum household income required we are at $159,000 or so for that entry level single family home and $112,000 for our entry level condo, just as a reminder, this is household income with no other debts, what is the minimum needed to qualify using kind of conventional financing. And then here's where things really kind of get interesting.
Now. It's not unusual for the end of the year for the market to kind of heat up On this absorption rate, and the reason for that, is that universally, well, everything slows down towards the end of the year, buyers tend to slow down less than sellers. So we get this situation where the number of listings comes out coming on the market goes way down. And the number of buyers coming into, you know, out there looking only drops a little bit. And so we kind of get these high absorption rates, right 93% In our intro level, single family home, which is a hyper competitive market, and 84% for our actual condo, though, that doesn't really tell the whole story. Like I said, some of this is kind of really in a seasonal type nature. I do think it's interesting that that condo market is coming up, I think we might see a reversal on that median price. Remember, those prices are based basically four to six weeks ago, because they're based on sold data, which is transactions that were negotiated a month to six weeks ago. We looked at our total inventory, right, I think this really tells the story here, where were we at last year, probably Gosh, around maybe 16, or 20 150 units, we are now at 1500 units. That is pretty much almost a 33% drop in inventory versus last year, things are a little bit closer on this condo market to where we were last year. If we look at our 14 day, still active percent, I think this one is just kind of another another vantage point of market competitiveness, you saw kind of all the way through the spring in the summer, the market was competitive competitive, then it got a little less competitive. Now it's diving towards being more competitive.
And what I think is interesting is this is more competitive than it was at this point last year, but still less competitive than it was over the summer. So not all bad news on that front. And then if we look at our weak supply of homes, again, we are down versus where we were at last year, you see this reversal in the condo market. I think that's interesting. Indicating that condo market is heating back up, I'm telling you that is really interest rate driven. And then down here are in trouble single family home again, those months of relative inventory down to about there seven weeks, you know, that's still better than it was over the summer, not as good as it was at this point last year. So let's take a second here, I'm gonna go off share. Let's take a second and talk about what does this mean, for 2024.
Because I know most of us are starting to think about 2024 Maybe you have a bonus you're expecting in January, and that's going to feel your down payment. You know, I think we are setting ourselves up if these interest rates either hold where they're at, or we continue to see kind of a spring where they drop a little bit further. You know, right now we're right around kind of that 7% ish market. You know, for those conventional financing for 30 year fixed. I think if that dips into the sixes, I think you're going to see a real kind of a bit of a bull run on home prices, I think it's going to get more competitive, it's going to get harder. Like I said, If I were a betting man, I would say you are better off buying today than you are by two or three months from now. So if that is an option for you, I know it's not an option. It doesn't work for everybody. But if that's a possibility, really I know it's the holidays, you want to be drinking eggnog and all these other fun things. But if you're willing to kind of put in the work, it's definitely a little bit better of a time of year for you than what I expect to see in the spring kind of go into that February, March kind of April timeframe, which I think is going to be pretty busy. So if you're thinking about buying really I think now's a better time than it will be relatively you know in those further months, February, March, April.
Obviously if you can be in there January January is typically still a good month, not usually as good as December for buyers, but it is still a better month than being in the spring. Once again, thank you for watching. We appreciate your viewership. We love those questions and comments. Keep them coming. Don't forget to like subscribe and hit that notification bell. And of course as just a little bit of a commercial for us. If you are looking to buy your first home, absolutely we would love to help you with that. Help your dreams of homeownership come true so you can start building long term wealth. Thanks so much for watching. Stay safe everyone. We will see you again real soon.
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