The Most Boring Update -- First Time Buyer Market Update 4-30-24

Well, hello everybody and I'm going to bring you this time we're having the most boring update for Southern California. first time homebuyers. Let's get started. My name is Stephen Meade and I'm the broker here at Domicile Real Estate where we are on a mission to help California's renters become homeowners.

Why is this a boring market update? Well, to be honest, it's because this is one of the most normal market updates that we've had for first time homebuyers. Do we still have inventory issues? Yes. Do we still prices? Yes. All right, interest rates still high? Yes, all of those things. But there are a lot of things in this market that actually look like a more normal marketplace, and not the crazy weird circus s marketplace that we've really been seeing for the last few years.

Let's go ahead and get started. We're going to go through our market stats, and I'm going to explain to you why this is a boring, but a good market update. If you are a first time homebuyer, so we're going to start off and talk about prices. Right prices are probably one of the top things on the mind if you're an entry level, homebuyer and this is our entry level market update. If we look here, our blue line is our entry level single family home. That's a three bedroom, two bath. And then our red line is our entry level condo in that two bedroom two bath configuration.

What are we looking at price wise here in Los Angeles and Orange counties for these? Well, basically at that low end, you know, we are still at a point that is gosh, you know, really right around $800,000 for that single family home and 565 per condo. Believe it or not, if you look at these charts over the last year, I think what's important to see is that while the prices have absolutely gone up, especially here for entry level first time homebuyer, the reality is they have not jumped up like crazy town. This has not been one of those years where we've seen a huge 20% increase.

Now if you're looking at this chart, yes. Was it great to have been a buyer right around that, right around the turn of the year, that sort of December January timeframe. Of course it was that was a relatively good time. I've talked about that 1000 times before, it's my favorite time of year to work with buyers, because really, they kind of have the best market going on. Moving on to our total monthly payment. Yes, interest rates are still elevated. But because we've seen just a little bit of easing in that home price.

Remember, this is based on older home prices, but we're seeing $6,600 on that total monthly payment for that entry level single family home and 4935 for that entry level condo. Now I am talking a little bit fast. But I want to remind everybody, this is based on 5% down, including mortgage insurance taxes, HOA fee. So we really wanted to give people a realistic look at this number and what this number actually means for a lot of people out there who do not have a big down payment going into this.

Now what household income is required as a minimum, this is the minimum household income with no other debts required to purchase at this point, we're at $161,000 for entry level, single family home and $121,000 for our entry level condo, I remember that's household, assuming you have no other debts, and you're at that sort of 5% down price points. So the nice thing here is guess what these are, you know high numbers, of course, but remember, this is for a household. So, for example, you know, if you had two people who are in the same amount of money about $80,000 Each would qualify for that entry level single family home. This is where things really get interesting, right? And if you've heard me talk about this before, you know 80 To 90% Plus, in 14 day absorption rate.

That's a crazy town circus gazillions of offers fine away all of your rights kind of a market. But that's not what we're actually in here. And what I find interesting is looking at how close these entry level single family homes and condos are together in this really there within for the last six weeks, they've been within five percentage points of each other. What does a 77% absorption rate really mean? It means this is still absolutely a seller's market, but it's not absolutely a seller's market, meaning there will be homes that sit on the market. It's not everything isn't gonna sell not even the homes. You know that back to the railroad. attracts and feel the rumble the train, those ones are going to sit a little bit longer. This is a much more normal seller's market than really we've been seeing the last few years total inventory, some more good news, if you're an entry level home buyer, look at the amount of inventory we have for that entry level thingo family oh three bedroom, two bath that is higher than it was last year.

And it's higher by honestly a good amount probably 25% or so. Same thing over here for entry level condos, we're seeing higher inventory levels than we saw this point last year. In the case of the condos, we're still not matching our peak of last fall. But for entry level single family homes. I mean, look at this, we have not had this much active inventory in the last year. So definitely some good news out there. If you are a buyer, still active percent, this one's kind of interesting. You know, this shows us that this is still a relatively competitive market. So it is a less competitive market than it has been. But it is still a competitive market. And to be honest, this is let's just be clear, we have beautiful weather this week.

This is Southern California, a lot of people want to live here. Is it really that surprising that this would be a fairly contested housing market, it shouldn't be that surprising. But it's a little bit less competitive than it once was. And finally, you know, this really is a chart that I think kind of explains something interesting. So if you look at our total inventory, right, if we go back to this total inventory graph, you can see that our inventory levels quite a bit higher than it was a year ago in both of these categories in terms of number of homes available. But if we go through here to our week's supply of homes, that really kind of tells us sort of an interesting story, especially with these entry level single family homes. Around this time last year, we had four weeks of inventory. Right now we are at only just about five weeks.

So these are not big numbers in terms of relative inventory. Right, this is still a very limited inventory market. It's just not what is limited in its inventory. And really it's the same story here for our entry level condos. But let's go back just for a second here. Why is this a boring update? You know, what a lot of I when I talked to a lot of you and believe it or not, we've had a lot of buyer consultations and last month, something that keeps coming up as people say I want a normal real estate market.

Well, what really is a normal real estate market? I'm not even sure I know anymore. But I can tell you this, the market we have right now is a lot closer to a normal market than we've really been in last few years. And yes, I'm even including interest rates in that discussion. 334 percent interest rates are not normal or not normal, historically. Right. And while I have every expectation that in the next 18 to 24 months, we will absolutely see rates that are lower than they are today, I think expecting us to go back to those really low three, four, maybe even 5% rates, it's really asking a lot, I think we're gonna see things ease down into the sixes.

I'm actually excited about the opportunities that first time homebuyers have today. Yes, the house is going to be smaller than you want. Yes, it's not going to have as big of a yard. It's not going to be remodeled probably as much as you would hope it would be for your budget. But you still do have options. And I think that's something we haven't really been able to say, you know, up until this point is options and choices. And it's great to see buyers finally start to get some of those things again. And yeah, that's all we've got for you this week.

Thank you so much for watching questions and comments. We definitely love those. Don't be shy about writing those in. Don't forget to like, subscribe and hit that notification bell. And then finally, as always, right? If you are looking to become a homeowner or you know somebody should become a homeowner, absolutely. We would love to represent you and help you achieve that dream and that goal and really change your financial trajectory. It's your turn. Thanks so much for watching everybody. We'll see you again real soon.

Post a Comment