The BEST Market for Entry-Level Buyers in a Year -- SoCal First Time Buyer Market Update 6-11-24

 This is the best market for first time homebuyers that we've seen in the last year here in Southern California. But you're going to need to do three things if you want to take advantage of that. So we're going to talk about that. So join us and stay through we're going to give you the three important tips to take advantage of what is probably the best market for first time homebuyers. Let's get started. My name is Stephen Meade with domicile real estate, where we are in a mission to help California's renters become homeowners.

Let's go ahead and get started on why this is the best market in real estate that we've seen for entry level home buyers in about the last year or so. So we're going to go ahead and we're going to bring up our numbers, because we can prove it. So first thing we're going to talk about is prices. And I know a lot of you follow prices, but it's also important to understand the big picture. We're going to go over not only prices, but really where that payment is based on where the interest rates are at. So if we're looking at close prices, we actually see that things kind of jumped up at the beginning of this year. You can see that kind of in both categories. And then we're kind of, we're kind of a skating buyer, kind of going back and forth in this zone. We notice we have a little bit of softness. I hear on our blue line. What is the blue line? Or blue line is our entry level single family homes.

Those are three bedroom, two bath, detached properties. The red line is our entry level condos, two bedroom, two bath. And this is a composite meaning. We've taken staff from both Los Angeles and Orange County to combine them together. And just in case of those of you are wondering our entry level, how we figure something as an entry level property is if it's in that first quartile of pricing, meaning, if the median is halfway, this is halfway between the bottom and the medium. And if we look here, we are right around, maybe a little bit under $800,000 here on our entry level, single family home and $600,000 here on our entry level condo property. So if we look at our total monthly payment, this is really where some of the news is, is actually starting to get pretty good. So this, again, is based on 5% down. It includes mortgage insurance, taxes and HOA fee in the case of our condo, because we really want to give people an accurate perspective of that first time home purchaser. Some of you have great savings, and that is awesome, but a lot of you out there do not have that level of savings.

So if we go down here, our payment is 6522 and then entry level single family home and 5146 how does that really stack up versus where we were at last year? Well, around this point last year, we were right around that $6,000 mark, so this is roughly a little bit less than a 10% increase, to be honest. That is not that far off of inflation. Was there a great time towards the end of last year to buy Yes, there was, we told you that not, not many of you actually listened to us on that, especially if you're looking at a single family home, as you can see, home, as you can see by this chart, if we look at our minimum household income required to purchase this, this is the one that I always like to watch.

Affordability is something that we talk a lot about in the market. You'll hear it in the news. You know, what does it really take in terms of household income, whether that be one income earner or two income earners, or even three income earners, to make this work. Well, if you have no other debts, you need just under $160,000 at that entry level single family home point, and $126,000 at that entry level condo price point, given current interest rates as of earlier this week, but this is the chart where things really get interesting. And this is our absorption rate, right? This is measuring the speed with which homes are leaving the market rate they're going under contract, versus the rate that new homes are coming on the market. And we are at 67% and. Financial level, single family owned 57% condos. This is great news if you are a buyer.

What this means is that your level of competition, on average, is going to be significantly less. And we're going to get to that at the end. We'll be talking in about our three sort of rules that you need to follow to take advantage of this market. If we look at our total inventory, that number has accelerated upwards a little bit. We actually have quite a bit more inventory. Our entry level single family home, we were, gosh, probably about 1400 last year, and we were more like 1750 this year, definitely a very noticeable increase. And our intro of a condo, the numbers are really even kind of more substantial, almost doubling. So if you're an intro of a condo buyer, you really have a lot more choice on the market.

This one is kind of interesting to me. So, you know, we measure some of these market stats in a couple of different ways, and the reason why we do that is because none of these measurements is perfect, right? There is no single measurement that accurately describes the market. And so, in addition to looking at this absorption rate right, which is very favorable for buyers right now, if we look at this right, just the raw numbers properties coming on the market versus probably losing market. But then, if we go are 14 days still active? So this looks at all the new listings that came on the market. How many are still active after 14 days? And this number went into lower actually means more competition. And we see kind of an interesting divergence here. Why is this number going up for condos, I less competitive and going down for single family homes? What does this mean?

Well, what this means is not every home is giving the same level, is getting the same level of attention. And in fact, even between condos and single family homes, we're really seeing different attention levels. So whenever I see this number, start to look pretty competitive for single family but the inventory is still going up. What does that mean? It means the new listings are getting a lot more attention than those older listings that have been sitting on the market. In the case of the condo, everybody's attention level is down. But for single families, it's those older listings that are getting a lot less attention in terms of going under contract.

If we look at our week supply of homes, right? That tells another story. If we're looking back really, versus last year, if you're a condo bar, we have almost 10 weeks of inventory that matches where we were kind of pretty much last fall, right? Great numbers if you're a condo buyer, but similarly, not a bad story necessarily. If you're a single family home buyer, we have about six weeks supply of homes that is significantly more than we had at this point last year, and still a little bit of kind of our high water marks from last fall, but to be honest, we're in a much better position, really, than we were in last fall for a couple reasons. So I'm going to go ahead and go off screen share here, and we're going to talk about our three things you need to take advantage of this. So the very first thing that you need to do is you need to have some flexibility.

So what I mean by that, if you are looking for a needle in a haystack, if there is, excuse me, if there is one type of property you're looking for. So we have a lot of architectural home buyers, right? They are looking for something special. And so even in a market like this, you'll find the special homes are still getting tons of attention. But if you're not someone who has to have a particular type of home, if you can have some flexibility, really, I think there are some values to be had. Second thing to do, number one, the second rule, or rather, number two, the second rule on this is that you need to be willing to go after a home that needs some work, if you are willing to open up and expand to homes that are not turnkey, you're going to find that there are a lot more opportunities available to you, especially homes that look ugly in the pictures. What do I mean by this? A good friend of mine, a colleague, has told me she has had trouble selling what is otherwise a great house, but it has navy blue carpeting, including in the bathrooms. Ew, gross.

Buyers don't want that, and that home six months ago would have sold no matter what. Today, that home is going to be a deal for somebody who all they have to do is deal with navy blue carpeting, which, by the way, is in great shape. It just looks really weird and is in the bathrooms. And so what's the third rule? Right? The third rule, to take advantage of a market like this is to really think a little bit bigger and think a little bit more globally. What do I mean by that? I mean that in terms of timing, we're in an interesting space in the market, and I want to tell you, it's a careful balance. I don't want to see anyone sign up to buy a home that they really can't afford, banking, hoping, praying that interest rates come down. You need to be able to sustain whatever you buy.

What. It be great if and when those interest rates come down, and I think they will absolutely but do not develop a strategy that requires that to happen. However, with that said, and this is the balance, if there was a time to maybe push the envelope a little bit, and a lot of our clients come with the price range they'd be comfortable at, and then the price range they go to for the right house, now is really the time to be kind of looking for that for the right house, because I think there are some deals to be had out there, and sometimes those deals are going to involve stretching just a little bit. And if you can do that comfortably, I think you're going to be very, very well positioned in the years to come anyhow.

Thank you so much for watching questions, comments. We love them as always. Don't forget to like, subscribe and hit that notification bell. And of course, if you are interested in buying a home, becoming a homeowner, absolutely, we would love to lend you our expertise. Our contact information is down below in the description, and we would love to hear from you. Have a great day. We'll see you again real soon. Bye.

 

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