Quality Over Quantity

Hello, hello, hello, did you miss me and I actually took last week off for a short vacation, something I actually never do. But I am back and we are talking about quality over quantity. Let's get started. My name is Steven mean, I'm the owner here at domicile real estate, where we are on a mission to help California's renters become homeowners.

This is our entry level housing market update for Southern California, first time entry level homebuyers. And you might be noticing out there, it seems like there are more houses, and yet there is somehow less to choose from. And that's what we're going to talk a little bit about today. But to kind of show some market signs that, you know, kind of don't make sense on the face of it. But really, there is a logical explanation on why the market is moving in this direction. And that is we're really seeing a concentration of buyer attention.

So in a normal market, maybe 75% of buyers would go after 25% of the listings, right, that's kind of a kind of a three to one margin. Right on the most popular listings a day, I think that the top 10% of listings are getting 90% of the buyers, that is a nine to one concentration. And that's also the reason why you're seeing very disparate market results, right? Like someone who is looking at homes that have been on the market, 30 days is gonna have a very different buying experience than someone who says I want a house that looks like it came out of a magazine, if you are the latter kind of buyer, maybe you're busy, you don't have a lot of time, you want to get a finished product and you want it to look great, you'll notice there just aren't that many options available to you.

We have a lot of flip properties of varying qualities. But really those designed to be a forever home type renovations. Those are rare in this marketplace and highly prized by buyers. Let's get started and kind of go through our stats. So starting off here, we're looking at closed prices. And something interesting has happened not sure if this is the data anomaly. But guess what the condo market is really kind of taken off a little bit. With that pricing, we're also seeing price increases on our entry level home market as well. And that's kind of an interesting result, we're going to talk about why that's interesting in a second, because some of the other market measures would not lead you to believe we were facing an era of rising prices. So that is our close prices of our first quartile. Just a reminder, by the way, everyone, our estimate for entry level is a three bedroom, two bath interlevel single family home and the blue line and LA and Orange County and it is the first quartile. And our entry level condo is a two bed two bath again, and Ellie and Orange Counties in that first quartile.

If we look at our total monthly payment, we see that that's gone up. But really, it's been hovering kind of around the $6,700 a month level probably for the last kind of six months, it's kind of gone up and down a bit. But really we've been hanging out in that $6,000 plus range, pretty much for most of the last year, you'll see that that, again, that entry level condo number has jumped up there. I think that's a result of that price going up we have seen a little bit of moderation and interest rates in the past two weeks, maybe a tiny bit. And again, just as a reminder for everybody. These numbers are really based upon a 5% down. They include mortgage insurance, they include taxes, it's really to give people an idea of what it actually costs if you're a true entry level buyer.

If you don't have a big down payment, what does that look like? And then again, our minimum household income required regards from paid about $165,000 for that entry level, single family home again, that's minimum household income required to qualify with no other debts and $132,000 here just about for our entry level condo. Now this is the one that's interesting, right and this is our 14 Day absorption rate and this gives us a clue as to what's going on so we're seeing really kind of some heavy you know some increases steadily increasing prices, especially here on our enchiladas single family home. But this absorption rate is not super high. What does that tell us? Well, what that tells us is that buyers are being picky. And that buyers are willing to spend the bucks but not for anything.

So the homes that are actually selling are in a pretty hot market space. But overall, we're finding there's extra homes on the market, they're just being rejected at these prices, by consumers. And they tend to not sell until they drop, or they have a little bit more marketing time. The ones that are going for the big bucks and are selling quickly are those homes in that kind of that top 10%. That's really where a lot of the activity is it's kind of a feast or famine type situation. If you look at our total inventory, this is really good news on the face of it. For first time buyers, it does mean especially if you're willing to look at that broad spectrum of properties that are out there, you're gonna find there are just by the numbers, a lot more properties than there were last year, you know, we're here probably what like 16 150 entry level single family homes versus maybe 1400. Last year, that's definitely a nice little increase of 10 20%. And then for our entry level condos, were at probably 1200 50 versus around maybe 900 850. Last year. So that's more like a 50% increase.

If you look at our 15 day, still active percent, you'll see these are still trending in that competitive zone. Right. And that tells us you know, after 14 days, what are the what are the new listings doing? And they're actually selling? And then if you look at our week supply of homes, right, this is this actually gives us an idea of inventory relative to demand, right? Because if we look at this number of accurate total inventory, that's a raw number. But that's not reference to how many buyers are out there. And how fast or the home is actually going under contract. We look back here at our week supply rooms, what do we see? Well, the condo inventory did take a jump, which leads me to believe that that price jump is pretty short lived. But we're still in a we're still in a pretty low zone of relative inventory on these entry level single family homes. Yes, it went up to five and a third weeks of inventory.

That's not really that much higher than we were at last year. Meaning that even though the number of homes is a bit higher, the relative inventory is not what does that tell us there are more buyers in the market this year than there were last year. And I think, again, a lot of these buyers are very concentrated on a subgroup of homes, there are the good homes, and then there is everything else. By the way, if you're a seller and you're watching this video, here's a clue for you, you want to be in that top 10%. And spending the extra money to be in that top 10% could have a wild effect on where your pricing ends up on your home. Now if you're a first time homebuyer what advice we have for you, you know, I think it really depends on what you're looking for what type of buyer are you, if you're the type of buyer who can be a bargain shopper, you have vision, you have time you have resources, both in terms of money as well as maybe assistance and skills. buying one of these kinds of also ran properties can be a very good bet right now, because you can turn it into one of those top 10% properties.

If you play your cards, right, and you're very strategic in your upgrades. If you're the kind of buyer who needs a finished product, you don't have a lot of time, right? You know, you make great money, but it's because you have a job and you've worked very hard. If you're in that category where your lifestyle does not permit you to do kind of one of those homes that needs a little bit of work. Well, I think my advice to you right now is shop for what you really want. And when you find it fight for that house 10 years from now, if you paid an extra 20 or $30,000 for the house you really wanted, you are not going to care. However, even if you got a great deal and a house that didn't work for you in 10 years, you will not be happy, you will be sorry about that. Or worse, you will be looking for another house and the one that you bought didn't work out.

So you know, depending on what kind of a buyer you are that really determines your strategy. By the way, as an aside, one thing I wanted to talk about a little bit because this has come up with some of our clients lately is there is no one winning strategy in a market like this. It really depends on what kind of a buyer you are, what you're looking for what the situation is for the properties you are interested in. So having a limber and flexible strategy, really, I think is the winning strategy.

There is no magic bullet. There is no secret sauce. Just having someone who goes above and beyond is really important. With that said time for short commercial. If you are looking to buy your first home or you know someone who should. Absolutely we would love to work with you and lend you our strategic expertise and help make those dreams come true. Don't forget to like subscribe and hit that notification bell Once again thanks for watching questions comments and we love them we will see you again real soon

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