Is the Socal Market Collapsing?

Is the SoCal housing market collapsing? This is not a click bait title, it is a real question. And it's one that we're going to answer today. Let's go ahead and get started. So, let's start and talk a little bit about why we would even say something like this. And kind of an overall theme that I want to mention this week.

And that is statistics without wisdom and interpretation can often lead you down in erroneous conclusion, just reading the market the wrong way, or forgetting about something important. An important detail can really put some of those statistics in to perspective. So just we're gonna go ahead, we're gonna take a look at some of our stats this week. So let's start off here with number one, something good, or good, I guess if you're a seller, maybe.

And that is our pricing. Pricing is as we predicted, going up. But remember, this data is old, this is close prices. This data is four to six weeks ago, it tells you how the market was four to six weeks in the past, not how the market is today. But what are the indicators that are giving me a little bit of trouble? Let's start off with their absorption rate. You'll notice here on our absorption rate, look at this graph, look at the percentages that we have. When you take a look at these numbers, they usually close to 100%, somewhere between 80 and 100%. Most of the time, and we kind of track this, it's sort of a proxy for demand, right? This is a comparison of the number of homes that came onto the market, versus the number of homes that went into escrow and have left the market. And here is where we are at. Let's take a look right here.

We see this number jumped, gosh, well over 100%. And where is it two weeks later in the toilet? Why am I not at all concerned about this number? I'm going to tell you in a second. Now, let's go ahead and take a look at the next item on our list here. See, if we take a look at our 14 day still active percentage. So this is a another measure of market competitiveness. And what do we see happening right here, we see that this number, let me get out our little pointer. Again, for those of you watching on YouTube, you're going to see a little bit of a pointer to to what we are talking about here. You'll notice it went down in a more competitive market, and then it has shot up in the last two weeks.

So what's going on? Is our market collapsing. Let's go ahead and actually talk about this a second. No, no, the market is not collapsing. And I'm going to tell you why it's not and how you maybe eliminate lead a stray. If you watch. And if you take a look at those stats and don't interpret them correctly. We're in a time of year when people often do not put their home on the market. Now, this is important for two reasons. Reason number one is that fewer people move in the wintertime. This is true in Southern California. It's true in Sheboygan, Wisconsin, it's true almost everywhere nationally, to a smaller, greater degree.

But more importantly, is reason number two. Reason number two is not only do we have fewer people putting on their homes, the market in general, those who are will often hold their listing, right. So they will say I'm not going to put it up the week before Christmas. I'm not going to put it up the week of New Year's, I'm going to wait until right in the beginning of the new year. And then a bunch of listings come onto the market all at once. And that is exactly what we have seen happening. Now I have no doubt that the buyers are out there and they will start to snap up this inventory. This is a market reaction. Right?

This is a timing reaction to what we have going on. And you can see your total inventory has gone up in little bit. If you look on this chart, however, again, I'm going to caution you I'm going to tell you, this is a little bit of a false prophet right. It is telling us something about the future that may not be true. This isn't an unusual two week period during the year, we kind of see a dramatic drop in inventory right before the holidays right because people are holding off putting on their homes in the market. And we tend to see that having a little bit of a bump in inventory. If you look at where we were at last year, I think that is just as important here. You can see that inventory also bounced a little bit at this point last year and then it proceeded to deteriorate further as we went through the spring. I fully expect that to be the exact Same pattern this year. Yes for first time homebuyers it is going to be a little bit of a rough and bumpy ride for you. But as we are so fond of saying on this podcast you've heard me say it probably at least 10 times homeownership is difficult because it's worth it. Let's go ahead and take a look at our other stats. I will run through these really quickly.

So pricing we already went over that. Affordability, we are at about $6,000 a month for our entry level single family home we are at $4,600 for an entry level condo. Quick reminder, 5% down includes mortgage insurance taxes HOA fee, in the case of our condo, this really is meant to represent a true first time homebuyer payment figure. We look how much income is required if you have no other debts in your household to make this work $148,000 for that single family home, and $113,000 for that entry level, condo absorption rate. We've been through this see how it spiked right before the holidays out because buyers kept buying but no new homes came on the market. And now it has plummeted for exactly the inverse of that buy rate is the same.

A bunch of people waiting on those listings that put them on the market all during the first week of the year. 14 days still active percent. Why is that showing a less competitive market again, we just have a momentary minute of a ton of inventory. I think it will be very short lived. total inventory went up for the same reason. And then weeks supply of homes. Again, this is a temporary jump. I don't think this is going to persist. And again, let's take a look. Where were we at last year. Gosh, on our entry level single family home last year, we're in 11 weeks. So even even with these numbers we are at we are at a tighter market than we were at last year. Once again, everyone thanks so much for watching. We love making these videos. But we need you to participate more.

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We are on a mission to help California's homeowners or California's renters become homeowners. If that's you and you would like 2024 to be the year you become a homeowner. Definitely reach out to us. And finally, in the description below, you will see a link we are doing a free webinar entitled How to Buy and renovate your first home. When you don't have rich parents. We give you some techniques. It's 30 minutes we value your time, you can sign up using the link below. Thanks so much for watching everybody. We will see you again real soon.

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