Living For The Chase
Hello everybody and welcome to a another episode of our first time buyer market update. This is for Southern California. My name is Stephen Meade. I'm your host with Domicile Real Estate, where we are on a mission to help California's renters become homeowners. So if that is you, you are listening in on the right place. So I'm going to start this off with a little bit of a story. I actually like telling stories about the clients that we work with and things that are going on.
Obviously, privacy concerns, I can't tell you who this is, or leave out some specifics. But we had some clients who wrote an offer recently on a home in a very popular neighborhood of Los Angeles. And this was a very cute house, but a very small house, right, probably around 1000 square feet on a smaller lot. But it was a single family home in this very desirable locale. You know, despite writing, you know, what I felt was an incredibly aggressive offer, and ended up going for a bit more than we offered over 20% above list price.
Now, I'm not telling you this story, to be discouraging. But to make an interesting point. And that is not every home is going for 20% over list price. And I think why is it that some of these homes are experiencing crazy levels of demand? And others are not? And if you're a buyer out there in the marketplace? Do you follow the herd and go after the same houses that everybody else is? Or are you looking for those places? Maybe we're a home is a little bit undervalued? Personally, my viewpoint is I think we dodged a bullet on that particular house. I think it went for too much money. I don't think it was worth it. And I think you know, I hope the buyer winds up getting it will end up being very happy there. But from an investment standpoint, I'm not sure that buying that house at that price point was will end up being the wisest move for them. You know, and when we look at our stats, right, like we look at our percent closing over list price, you know, we find that we're probably in that 100 103% range on average.
So 20% over list price is really just kind of a wild stretch. And, you know, was this home purposely underpriced? I don't think so. You know, I think the agent thought it would go a little bit over, I don't think she thought it would go over nearly as much as it did. And so it makes me think if if I'm out there, if I were a first time buyer in today's market, I'm looking for the places that not everybody is looking. Now does this mean you should give up on things that are important to you.
Of course not. Things like location does it back to like a busy road, all these things are still important and bear those in mind. But if you're following that trend, you know, if you're a first time buyer, you're really looking to the future, especially if you're looking to if you want to stretch your dollar, right? Look to the places not that are the awesome places today, think of what are going to be the awesome, desirable hot neighborhoods tomorrow. And if you don't know what those are, you are welcome to reach out to us. And we can help you work through which of those kinds of neighborhoods are going to tend to be the ones that might work for you and your particular situation. So let's go ahead and get started and go through the stats. And we can tell you about what is going on out there.
And what we have. I know what we're doing here, I've got two windows open. So let me fix that really quickly. And I will get that set up for you guys. Give me a second here. Like we're just about done here. There we go. And I can get this set up. So all right, let's try this again on our screenshare here. There we go. Now we have the right number. So this, again, is our stats that are purely for our entry level homebuyers. And we define an entry level home as we've got two sort of market segments, right, this entry level single family home, which we basically say as any three bedroom, and two bath and LA and Orange counties in the first quartile.
So that's like saying if the median is halfway between, you know, if you've got 100 houses, if the median is the 50th most expensive house, the first quartile is the 25th or the 25th least expensive home on there. So it's like a quarter of the way up that ladder. And I think that's a good approximation for entry level housing. And if we do the same thing with a two bedroom, two bath condo, I want you to notice something here. This blue line is entry level single family homes. This is delayed, but you'll notice this number is creeping up. If you look at this and we go back a year here, you see that it kind of steadily fell and then sort of at the end of January bottomed out and started going back up again.
What we're seeing out there in the marketplace is that prices are at Absolutely rising, the higher interest rates have two effects. The first effect is the one that everybody knows payments go up. But the second effect is that it reduces the number of people who put their homes on the market. And that has the effect of also increasing prices. So definitely bear that in mind. Now, it's not all bad news. And when I say that is, this is not the most expensive payments that we have faced in history. Right now we're at $6,102. On that entry level, single family home, there was a point last fall where that that was at $6,200 a month. Obviously, if you're like me, if you're a first time homebuyer, you'd like these numbers to be lower. But even looking at where we were, you know, around last year 5500 5600 $5,700.
You know, yes, it's more expensive. Is it like twice the price? No, it is not. If we look here, it's kind of a similar story with our condo market. This one does happen to be breaking some new ground. This is kind of matching our two previous highest points for payments. It's leveling off, but look at all this payment is going up on that single family. People want single family homes, and there's simply not enough of them to go around. If we take a look here at qualify, how much money do you need in your household? This is based on 5% down, and this includes taxes, insurance, everything else?
What is the qualifying income if you have no other debts, it's about $150,000 for entry level, single family home, and $117,000 for entry level condo. If you look at our absorption rate, and this is kind of a bit of a quick and dirty way of analyzing how competitive is our market, you'll notice that that condo market is in the 70s that is a you know a reasonably competitive market but not crazy. Anything as you start approaching 90% Here starts being a you know, definitely a very brisk market, you do not have time on the homes that come up for sale for these single family homes. Here is sort of the crux of the problem. We do a total inventory chart across the whole market. But when we slice it by entry level single family homes, I mean, this really just tells you where this problem is.
Today we are at about Gosh, about 1400 50 houses. Where were we a year ago? Over 2600 houses. Where did we peak last summer, we were close to 2700 2800 homes. So to see our inventory is half what it was last year, I think that really tells you the story right of what's going on and why it seems like there just aren't enough houses, it's because there aren't enough houses. We look at our 14 day still active percentage. Again, when this number goes down. It means that the market is more competitive. And you can see we are a level more competitive than we were last year. And it has been that way pretty much since February.
Finally, we've got our relative inventory, right, this tells us how many weeks of houses do we have on the market. And even when you measure it this way, which accounts for you know, there are fewer people buying homes right interest rates definitely make their mean there are fewer buyers out there. But because there are so many fewer homes, it actually means our relative inventory is lower. I mean, look at this. Last year, we were over eight weeks of inventory for single family homes. Where are we today with this blue line? 4.64 weeks?
Last year, we were 8.7 weeks of condo inventory, where are we this year, under seven weeks. So by any measure inventory is considerably less than it was last year. And that's really what's kind of affecting things and driving this market. So we're gonna circle back what does that mean for you? If you are a buyer hopeful and you feel like there is no way you're ever gonna buy a house? Well, step one is don't look in the neighborhoods that everybody is looking, don't look at the houses that everyone is looking for. Some things that I tell clients if you want to be in a better position, look for homes that have a solvable problem, right, something that you can fix that you can take on that the seller does not want to take on and makes that homeless desirable. Look for the homes with bad pictures.
Bad pictures are an opportunity for buyers. That means the sellers agent has screwed up and not done their job and that is good for you if you are a buyer. We have a home coming up in fontana. And you know we're looking through the comps deciding on the final price and guess what? Almost every competing home has terrible terrible photos. I don't understand why. You know this is the number one thing So if you're a buyer that's out there, look for the homes that have the problems you can solve, do not look for the homes that look like they just finished a magazine shoot, remember, the furniture does not usually come with the house, neither do the decoration. So somebody has absolutely great taste.
And the photos look beautiful. And that drives up the cost of the home, do do not get any benefit from that. So, you know, also be open to exploring things that are a little different. You know, one of the things that a lot of people talk about when they are out there looking in the marketplace is they make they make this notation, you know, my parents could buy a house on this kind of a job and whatever neighborhood Well, you know, it's not 40 years ago, it will never be 40 years ago, and those days are gone. So do not try to chase after them. Right? A lot of people are chasing something that doesn't exist so much the point that I think, are they are they more interested in the chase than actually getting the house. And what people don't understand is this world is very dynamic. If you for example, 30 years ago, bought a house in the San Fernando Valley that was considered buying a home in the middle of nowhere.
Today, Woodland Hills is prime LA area real estate, right. And so neighborhoods and areas change over time. If you embrace that, you can take advantage of that. And it can give you an opportunity to get into something, don't buy what the hot neighborhood already is, you will essentially be overpaying if you have a huge budget, by all means if that's what you want, and you can afford it go ahead and go there. But for most of the people that we talked to, they don't have unlimited budgets to try to stretch their dollars. They're trying to get the most that they possibly can.
And they're trying to get into that elusive single family homes to kind of get their foot in the door and actually own a piece of land because they think that's going to be worth more money and I agree in the future. I think owning any kind of traditional single family home with a real yard will be a huge advantage. Anyhow, are you living for the chase? You actually want to buy a home? Let us know in the comments or even better, reach out to us. Questions, comments, email, phone calls, we love all of it. We love to talk houses. If you're a buyer or would like to be a homebuyer here in Southern California, namely Los Angeles and Orange Counties. Definitely reach out to us we'd love to hear for you. Don't forget to like subscribe and hit that notification bell and we will see you again real soon.