My New Favorite Time of the Year

Hello, everybody and welcome to a another episode of our SoCal First-Time Buyer Market Update. My name is Stephen Meade, I'm your host here with Domicile Real Estate, where we are on a mission to help California's renters become homeowners, it is not an easy mission, I will tell you, especially these days, but it's also not an impossible mission. Anyhow, we're just coming out of Labor Day weekend. And you know, this is a very interesting time of year.

And if you've watched me for a while, I probably you've probably heard me say something to the effect of December is my favorite time of year. For homebuyers. I actually think that sort of this middle of August to maybe the middle of September is probably my, my favorite time of the year for first time homebuyers. And this year, it is really looking that way. Because there's kind of a confluence of some market forces that tend to happen around this time of year that make it a little bit easier for first time or entry level buyers. So we're going to talk about that and kind of weave that into what's going on and, and kind of give some context to some of the numbers.

So let's go ahead and get started. I'm gonna go ahead and kind of bring up some of our stats here. Okay, so if we're looking here, the first thing we're looking at is closed prices. And, you know, one thing I want to point out here is, this is kind of a big drop right here in this condo segment. I mean, this stuck out at me, right? When I looked at I mean, make no mistake I said a few weeks ago, are we hitting kind of bouncing out a little bit of a ceiling, with the rates where they are in terms of the number of buyers. And I think maybe there is a little bit of truth to that, especially at the entry level and of the entry level market, which would be these condos right, we're seeing that number drop to a 540 number. Now, these numbers do fluctuate week to week.

So it's kind of hard to take that with a grain of salt. But really, it hasn't been this way, since all the way back in May. So I'm gonna go ahead and say that maybe there is some significance to this number here, right? Because May, June is the last time we saw a number that looked like this. Now, if you look here on our entry level, single family home pricing, right, that is kind of eased off a little bit, but I wouldn't really call it slipping. Now remember, this data is old, this is six to eight weeks old, four to six weeks old, because it is based on closed data. So these are transactions that have already completed these are not based on people writing offers the day, but we are seeing just just a little bit of a software market at the entry level end. And I think a big part of that is because these first time homebuyers or entry level buyers are very payment conscious.

The second reason why and I think this is really a big force. And one of the reasons why I love this time of year is there is a period of time, usually August through about the middle of September, maybe end of September, even where our market is generally slower here in Southern California. And really, you could chalk it up to two things. The first is the vacation factor. When people are going on trips and traveling they are not thinking about buying or selling homes. Right. That's that's the number one factor. The number two is back to school. I think when parents have children are in school, their mind is on that back to school transition. It is not on housing. And I think that leaves a little bit of room right for the astute first time buyer or entry level home shopper to kind of wiggle in a market that is going to be just a little bit less competitive than it is.

Now I will warn you towards the end of September back in October, our market actually picks up a bit. And we see that comment to man and competition among buyers come back. So it's kind of a little bit of a window of time. If we look at our monthly payment, we've had a little bit of gains in the interest department that's ease things off a little bit are about the same at least $6,200 a month for our entry level single family home. Remember, this is a 5% down and includes mortgage insurance taxes, et cetera, at prevailing rates, to give you really a more concrete idea of where things are at. But if you look here in our condo market, that's really kind of where there's some good news for people.

Right? If you look here, we're at 4735. You know, we were last there in March of this year. You know, really this is this is definitely a market that is a little bit better than we had been. I mean, right we've been we've been over that number since June. So it's kind of nice to see a little bit lower of a number there. Now, what we really see this is in that household income requirement, you know, what is the minimum household income required without any other debts? We're looking at around $116,000 For our entry level condo, and right about 150 $152,000 or so for our entry level single family home buyer. We have seen rates these a little bit in the last week. I'm told they went up today, but kind of coming down off those mid sevens highs.

Now if we look at our absorption rate, right, that's still really strong for entry level single family homes that look it's it's definitely a little bit lower here on the condo side. These are still strong numbers, but it's just a little bit less competitive. So if you're a first time buyer out there, townhomes and condos are going to be easier right now for you to get an offer accepted on. It's also easier if you need to ask for seller concessions. We look at our inventory, we have started that end of year decline for Angelova single family homes, we're kind of holding steady here for our entry level condos.

Typically, we really see that decline in inventory begin in earnest sometime around the middle of November, and it kind of drops through the rest of the year. Last year, or this year, rather 2023 was a little unusual. We hit our bottom and April normally it starts going up before that. No big surprise, right. We are still in inventory constrained market, I would say if there was an issue in our market, that is number one, even more than interest rates more than demand, this is really about there not being enough homes.

And the only way to really solve that problem is to build or create more units. Now here is a bit of good news. And this news is a little bit more recent. So this statistic takes a look at all the homes that came on the market in the last two weeks, what percentage of those are still available, right. And when this number goes up, it actually means it's less competitive. By the way, this number for both our entry level single family homes and our entry level condos. This is a new high that we have not seen since February of this year.

So pay attention to this. This is why I'm saying that really we're kind of entering a period where there's a little bit less competition. And I think it's a little bit of relief. For first time homebuyers who are out there now, I will give you this advice. If you are expecting some kind of price or market crash, do not be a fool. I don't think it's going to happen that we just don't have the conditions for that we don't have the inventory for that. But definitely do take advantage and enjoy this little bit of respite in terms of kind of our really tough market for first time buyers. If we look at our week supply of homes, were holding steady still under six weeks of inventory for entry level single family. But look, this condo number is secretly crept up to eight and a half weeks.

This is a good thing again, for first time homebuyers. This means if you need that seller concession, you need that buyer down you need that closing cost assistance, it is a lot more less likely and easier to get those kinds of offers accepted right now, don't squander this opportunity. If you're a first time homebuyer use it to get the right home the one that you actually want. That is actually all that I do have for you this week, not a huge update. But really it is some good news.

And, you know, might not be the news people are expecting right, I think people would love interest rates to drop to five net percent inventory to double and prices to go down. Unfortunately, I think if you're a first time buyer, that's just not very likely to happen, at least not anywhere in the near or foreseeable future.

But it is nice to see there's a little bit less competition out there in the marketplace, it's a little bit easier to get offers accepted, it's a little bit easier to get that assistance by way of seller concessions than we've seen in the past. If you're an FHA or a VA buyer, this is exactly the kind of market you've been waiting for all those condos because you actually stand a chance versus what were typically those very high downpayment offers you have to compete against anyhow, questions and comments. We love them. Do not forget to like subscribe and hit that notification bell so you see when we do have new videos. If you are a first time homebuyer we would love to work with you. Definitely reach out to us down below. We've got some information in the description for you. I'm trying to think what else? Well, I think that's it. We'll see you again real soon.

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