Just Like Super Mario Bros: SoCal Housing Market Update

Well, hello, everybody and welcome to a another Southern California Housing Market Update. This is for May 23 2023. My name is Stephen Meade. I'm the principal here at Domicile Real Estate, real estate for people who love houses. Hopefully that is a you if you are watching this video, but today we're going to talk about the overall market in the last two weeks or so and kind of what's gone on and what's changing. And we actually have a little bit of something to talk about in. I put the, in the title here that this is just like Super Mario Brothers. What do I mean by that? Rarely do markets of any kind real estate or otherwise in the financial world, they don't move in a straight line, right?

Like so. If you are someone who is in that market, you and even if it is trending upward, right, it is rarely trending in a straight line, it goes up a little bit reports back it does this. And so while I think it is rather foolish to try and do overall market timing, because I think there are a lot of pros and cons. And I mean, that works for you best might be a bit better. I'm not I don't feel the same way about micro timing. And what do I mean by micro timing? Well, one of the things I remember as a kid, and I'm an 80s kid, is why remember, when you learned how to play Super Mario Brothers and how to beat the game, the most important thing was understanding that rhythm. And that timing of Bowser is fireballs, when they are sending a mature, right they come out. And when you got the timing down, right, that's when you could actually execute a move. And I call that micro timing. So you know, big timing is trying to understand what the market is going to do in the next six months, 12 months, 24 months, 36 months, etc. And I think that's very hard to do. And I think you know, any gains, you get probably cancel out making a timing decision that's good for you.

But in the space of, say, a two month period of time, there are definitely better and worse weeks to be a homebuyer and better and worst weeks to be a seller, especially depending on what you're selling, what you're buying, what condition level it is. And this is one of those periods of time when I think that some buyers in certain price ranges have a little bit of an opportunity. So let's go ahead, let's get into the stats and I am going to show you exactly what I am talking about. So okay, first of all, let's get in with our active listings, as we always do start, we are seeing a little bit of growth in under a million and a little bit of growth in the one to 2 million. This is a very property dependent. And what I mean by that is, you know, we are seeing some properties are sitting and the ones that are really desirable are still getting multiple bids. So, you know, this past week, my clients have all faced multiple bids all by buyers, so but we are looking at the stats, this is meant to look at the market as a whole.

So if we look at new listings in the last 14 days, those are finally beginning to tick up. And you see like this has been a gradual increase since that kind of low point. We're still not anywhere near the levels. We were at this time last year in terms of new listings coming on the market, but it's a little bit of growth. So we'll we'll take what we can get for buyers out there. Now if we look at our new escrows, this under 1 million is down down a decent amount and it's down a little bit on one to 2 million. What is this? Well, I think a lot of this is some financial uncertainty and higher interest rates.

So the financial uncertainty part is the debt ceiling. And one of the things I've noticed in our real estate market here in Southern California is it is rather politically dependent, not in terms of good news or bad news. But whenever there is something going on, right, whether it is a presidential election year, whether it is some kind of big Supreme Court case or fight that usually results in a buying public that is a little tentative, right, those buyers are a little nervous, like they're just kind of in this analysis paralysis mode. And I think that is what we are starting to see happening here as this sort of debt ceiling crisis grows, people are kind of taking a little bit of a wait and see. So we're seeing a little bit of a pullback, honestly, not a huge amount. But it is noteworthy. And I think it's definitely something to pay attention to. So what does this done to our absorption rate, right? This has actually caused our absorption rate to drop and not just in high end properties right, which has dropped into the 60 into the 60s. We haven't really seen that all year, but also looking at our under 1 million market which also has dropped to its lowest point in 2023. If you're a buyer has been waiting especially if you're in maybe that 800,000 1000 to a million category, I think you're gonna see that you have some more opportunities maybe that you didn't have a month ago, I think this is a good time for buyers. Now, the extreme entry level of single family homes, guess what, those are still really crowded because people just want to house, the yard and those entry level properties in whatever market you're in, whether it's LA County, Orange County, those are still going to be hot commodities. So don't let this fool you and think you can just write an offer on anything.

But we're definitely seeing this be a little bit softer, overall in the market as a whole. So look for those deals, they are out there. Now this one, I find really interesting, right? Our median price. And remember, this is based on data that is four to six weeks old. But our median price level has declined a little bit right after growing kind of a whole budget. And we're actually not that far off from where we were a year ago. But look at what has happened here in our entry level, which is this 25th percentile look at where this price range is. A year ago, we were down here, this one really, as the fall the winter went on dropped quite a bit right as a percentage especially. And then it really regained some ground and it's still regaining some ground. With those entry level buyers, I think that tells us about, you know, in terms of inventory, it's not homogenous across the market, right, we have a severe shortage of entry level properties. And we're starting to see more kind of as price ranges go up, there's a little bit more volume available, there are 75th percentile that showing some modest decline. So it's interesting, the middle of the market is facing the biggest hit the high end of the market, not as much and the low end of the market is still appears to be increasing in price. Now, this is our other secondary indication of market competitiveness. If our absorption rate is kind of our quick and dirty, how competitive is the market right now we see it's going down that is a less competitive market. In fact, I might even argue this is one of the best weeks to be a buyer, especially in certain price ranges all year in 2023.

And this also plays that out with these still active percentages going up. This means a less competitive market. And this is after a string of a tightening market. So this is kind of the first time we've really seen some good news coming up for those buyers, especially under a million dollars. And even our list of close ratio, which admittedly is still remember this is four to six weeks old data, it is still over list price on average. And it has been for a while it looks like it's tempering out a little bit, at least our one to 2 million, and maybe a little bit here on our or on our under 1 million is still going up. But actually you're going to see this one fold over to in our days on market has been dropping, but has stabilized out. And this is days on market for the properties actually going into escrow. I think if we were to do a days on market for the whole market, meaning ones that are in escrow and ones that have not yet gotten an offer, I think we would actually see that number going up meaning those less desirable properties are sitting a little bit longer. Now here's our three way chart, this is one of my favorite things. And we did see rents kind of come up a little bit crest, they're waning slightly in the past two weeks. And then our blue line here, this is our payment index that has waned a little bit on a median on a median priced home part of that is that pricing reduction going down. But this is still a pretty big gap right here. You know, normally, if you look through history, we're seeing something kind of in the in the 20% range. And this is kind of close to that when he 620 7% range, almost 30% range. So you know, the, this is a little bit wider than we normally like to see on an ongoing basis, I think we might see something happen here.

We obviously still do not have our inflation numbers for the month of May, those will come out in June. And if we look at our interest rates, you know, these are kind of firmly in the mid 60s, right? Like they're not, you know, this market is pretty volatile. We take this based on a one week measurement. So this doesn't always reflect what happened in the last few days. But, you know, we're really seeing rates kind of bouncing in the six to seven rate. I think if they dropped down below six, we're going to see really kind of a market that sort of overheats and takes off again, especially in those entry level price ranges. So, you know, if you're a buyer, right, one of the things that you have as a buyer is, while you don't have any control over interest rates, you do have control over exactly when you buy what I was talking about that micro timing. So if you pick a week, like this week, to sort of jump down and maybe double down on a house, especially if there's a property that comes up that you really like, you know, the interest rate if those interest rates dropped next year, you'll be able to take advantage of that. Right and be able to refinance on that.

So, you know, I would say I'd focus more on that micro timing and exactly what Where the interest rates are, where the interest rates are is pretty much what almost every buyer is focusing on right now. I think maybe taking a little bit more of a bigger view of a strategy could be helpful for buyers that have the affordability room to be able to do that. Anyhow, that's all I've got for you. Thank you so much for watching. Don't forget to like, subscribe and hit that notification bell questions and comments. We do love them. And if you are looking to buy or sell real estate in Los Angeles or Orange counties here in Southern California, we would absolutely love to work with you. So reach out to us if that's you, and have a great