The Best Worst Housing Market

Hello, everyone. Why is the title of this this is the best worst housing market here in Southern California? It is sounds like a contradiction of terms. But it isn't what a very strange place. And there are definitely some ramifications. And even more importantly, we have some definite winners, and some definitely losers in this market we're going to talk about today. Let's get started.

So we're gonna go ahead and jump in, probably right in the stats. And what do I mean by the best worst housing market? Well, if you were the kind of buyer who was waiting on the sidelines for interest rates to drop, what have you discovered, home prices went up and so did interest rates, right? Like you've really lost on both accounts, does that mean that there's no opportunity for you moving forward? No, there is a little bit of a silver lining to our present market. And that is really dependent on what price range you are in, mostly, whether you're a winner or a loser, as a buyer. And likewise, it is flipped in reverse, if yourself. So let's go ahead and get started.

We are going to run through the stats, because I think I think that's really going to tell us and really kind of guide our discussion on what we're seeing in this market. Okay. So if we start here, let's get the good news and our belts, we're looking at total active listings, I don't care whether you're an entry level buyer, or whether you are a buyer, looking in that one to $2 million price range here in Southern California, namely Los Angeles and Orange Counties, there is more inventory than there was last year, and not even just a little bit more really a good amount of inventory warm. And we're gonna go and say maybe we're going to call that a 20% improvement in inventory for under 1 million and possibly even a bigger percentage than that, maybe even towards a 25% improvement, if you're looking at that one to $2 million category.

So we're starting out of the gate, there is some good news, this is the best part. Now we're gonna get to the worst part. So we've got a little bit more good news. I mean, look at this uptick in new listings that we're seeing, right, like this is very encouraging news. But what's interesting about this is not only is this relatively speaking, a great uptick in new listings coming on the market, not just versus recent history, but this is the best two weeks we have had in the last 12 months for new listings. So there's never been a two week period in the last year, where we've had this many new listings coming in on the market. Again, great news, best housing market. Unfortunately, we're starting to see something else happening.

Look down here in our one to 2 million new escrows. That is also at a high point for the last year period. And if you look at this uptick, even though maybe we weren't at the heightened end. Last time, look at where we are now this is starting to get towards that high point range for that under 1 million. So we're seeing demand, really kind of bouncing for it. And this is the inspite of higher interest rates, right? So if we look at our absorption, right, this starts to tell you why maybe that there's a little bit of a diverging opinion, if you look, you're under a million dollars, that absorption rate is still close to 80%. But if you look one to $2 million, look at that, that absorption rate is really falling.

So one of the things that I think is really interesting about this is what does that mean, if you're a buyer, right? If you're a buyer in that under $1 million range, guess what this market is really pretty competitive, and hasn't really gotten noticed will be better for you. But if you're a buyer in that one to $2 million range, things are getting a little bit easier out there, especially if you're willing to look after the properties that are not maybe in that top 10% of desirability right in their given price range or area. If you look at our closed prices, remember this data is four to six weeks old. We definitely see that top bit of the market is the softest and the middle and bottom ends of the market are stronger. So kind of a bit of inversion of the normal logic right.

The normal logic is that when rates are high, it's that upper end that tends to do well, those buyers are less concerned with those interest rates, but in this case, it is actually appearing to be the opposite. Now we get some news, though that indicates there might be a little bit of trouble on the horizon. Look at this percent still active after 14 days in the market that went up, and now it is taking a turn downward. What does that mean? It means that even though we built up some of this extra inventory, we're actually seeing that demand relationship take a turn, we're starting to see more buyers coming into play. Taking up some of that inventory are starting to look like there, especially with the most recent properties that are hitting the market.

These are the more popular properties and they are going under contract. We look at our close to list ratio that is still over 100%, right? Like has it softened a little bit in the last couple of weeks, maybe, but these levels are still higher than we have been really since the beginning of the year. So we're still trending kind of in that 101 202% of list price. On average, I mean, some properties are gonna go even more above list price, and some might be a little bit under. And then we also look at our days on market for new contracts. This continues to march downward, right, this is less than it was at last year. So it's like what gives right we have more homes coming onto the market. And we're seeing those absorption rates drop, yet the days on market for new contracts is not going up?

Wouldn't we expect that we have a reason for that, we're going to talk about it in a minute. And then if we look at our affordability chart, really I mean, this is the one you can see with rates going up and prices going up, that payment index has gone up. And the rents have sort of taken a little bit of a momentary uptick to when it comes to rents on a single fam medium priced, single family home in Los Angeles and Orange counties. And then finally, of course, prevailing mortgage rates, guess what they went up in the last four weeks shocking news there. So we're gonna go screenshare. And I want to talk about what's actually happening here, what are we seeing?

Why are we seeing increased inventory levels, and yet the market is still seeming competitive. And there's two things that are going on, that we want to talk about. One is different price ranges, we are seeing that entry level price range, that is really where the most crazy action is, this is where you're going to find the 10 Plus offers on a single house, it's going to be in that under $1 million range, we are seeing if you're a buyer in that one to $2 million range, you're going to see, maybe it's not going to be quite as crazy. However, there's a caveat. And that gets me to thing number two that we need to talk about.

And that is especially in that one to $2 million range, there is a big, huge chasm, between the haves and the have nots are measurement of days on market is days on market for new contracts. So this is days on market for the houses that are actually seeing the buyers, that number is going down. So what does it mean? It means there is a greater concentration of demand on the houses that people want. So if you're in that one to $2 million range, you might actually be able to score some deals. If you're willing to go after the homes that not everyone else is writing offers on. That's where you're going to see your best market power. If you're a buyer under a million dollars, well unfortunate, I've got some bad news for you.

You're facing higher prices, higher interest rates, and a market that really is just about as competitive as it's always been. If you're a seller, under a million dollars, and you've been waiting, sitting on the sidelines, thinking about moving up, now might be the time to make that move. Yet the interest rates suck, I know you're gonna have to give it up. But you're gonna get a great dollar amount for your outgoing house. And maybe you're gonna have a little bit more softness on the house that you are buying on your down leg transaction. And for a seller in that one to $2 million range. You really want to do everything you can to make sure your home is one of the haves not one of the have nots that is in that concentration of demand that we are seeing.

Thanks so much for watching everybody. It's been a pleasure as always questions, comments, we love them. Do not forget to like subscribe and hit that notification bell. And as always, if you would like to use our expertise on your next transaction in Southern California, we would absolutely love to represent you and be your agent. Definitely reach out to us we can have an initial consultation and talk about what we can do for you and how we can help your property dreams come true. Don't forget to like subscribe and hit that notification bell and we will see you again real soon.

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