The Most Important Chart of 2024

Well, hello everyone, and welcome to our first market update video of 2024. We have some very big changes planned for 2024, these videos are going to be very different than they have been in the past, we are going to start off with kind of a main topic that we're discussing, then we're gonna run through the other charts quickly. And then finally, we're going to tell you what buyers and what sellers and what combination buyers and sellers need to know from that information. So we're going to try to be a little bit more efficient.

Let's go ahead and get started. By the way, have an introduce myself, my name is Stephen Meade, I own a small real estate brokerage here in Southern California called Domicile Real Estate, our focus is basically on people making good real estate decisions. That is what we are doing with these videos in 2024 is to give you the kind of information that I would want to have, if I were a consumer, either buying or selling a property. So obviously, we're not going to beg. But if you are someone who is looking to buy or sell a home in Southern California, and you'll like how we do business, you like our knowledge and our expertise, definitely reach out to us. Now without further ado, we're gonna go ahead and get started.

And we are going to jump right into this because I think this is really, really important. This is the graph that is going to set the entire tone for 2024. And it really tells us everything we need to know. This is a graph we call our three way graph. Why do we call it the three way because it has three important pieces of information that are all relative to one another. The first is the red line, what is the red line? It is the CPI index. So we went all the way back to June of 2018. And from there, we measured that as kind of our zero point. And then we went out from there. So where is inflation running versus June of 2018. We are up about 20% since June of 2018 in total in terms of our CPI index. Okay, so we got that, what is the yellow line that you see here, the yellow line is also very important. This is what we call our rent index.

The rent index is a measurement of single family, home rents median single family home rents in Los Angeles, and Orange County. So these are the same types of properties that we are measuring with our blue line, which is our payment index. And again, all of these go back to where they started at the same point June of 2018. So we can see how these things changed from here. Well guess what? Big shocking news, payments have gone up faster than rents have gone up? Hardly surprising. And both of those have gone up faster than inflation. But here is the thing that is the most important takeaway from this chart. If you look at what happened back here, these lines, the rent and the payment index, were only about one bar behind each other, they got close together. And then as interest rates went up, look what happened. Did rents grow? Yes. Did they grow as much as payments? No. What's happened is the lowering of the payment index has brought these much closer in line. Why is this important? Well, it's important for one very big reason. I think this believes we are poised for growth. And in fact, if you were to look at this, and you were to say, how much room could we go and still be back here at this point, like we were for most of last year when we're approaching two of these bar graphs. That leaves us with approximately five to 10% of price growth.

Now guess what? That's based on interest rates, staying where they are, what happens if interest rates actually dropped, that is going to supercharge that growth even more. And now I'm going to take you through the rest of the charts here and explain how that supports this data. Right. We don't base it entirely off one chart. But all of the ingredients are here for a pretty explosive spring. Let's take a look at this active listings. How many are under a million dollars, way fewer than last year? How many in one to $2 million Bill fewer than last year and in fact, if you look at this, our inventory point right now is lower than it was at the lowest point in the spring of last year. This is looking a lot more like a 2021 style spring market. 14 days of new listings, these are dropped off the planet don't look at this. It's because it's the end of the year. We see that every year.

New escrows these are down however they are still up versus this point last year. That's a very important distinction. absorption rate through the roof. It is literally off the charts. Why is this important again And it sets the tone, buyer demand is quickly outpacing the rate that homes are coming on the market. Now we do have this closed price graph. This is not great news, right? This tells you that, hey, no things are easing off. Remember, this data is six weeks old, that is between four and six weeks old. It is based on high interest rates, it's based on the end of the year. I think this graph is a lot of noise at this exact moment in time, you kind of see this pattern, things go up through the spring than it is off the end of the year, very similar, almost every year, percent active still in the market. By the way, this still is a number that's looking like we're going to get into a fairly critical spring period here, it is still way lower than we were at last year, our list to close ratio still over 100%. Mind you. And by the way, our days on market for new contracts, that is going up here and shooting up. I'm not that worried about it.

I think a lot of that is the end of the year, we see kind of some seasonality to that. And then we're back to our three way chart, which we just talked about this dropping payment index means we are poised for price growth to spring that back up, especially if rents rise, all of these things are pointing to prices going up prevailing mortgage rates, of course dropping down. So I promised we were gonna go through this stuff pretty quickly. And I want to get back to you and tell you things that are important if you are a buyer in this market. If you are a buyer in the market right now, there is no value in waiting for you. Unless you have an unstable situation, or you're expecting a job promotion, or there's some reason that uprights are qualifying there is no market driven reason to be waiting, there was very little upside in that I think all things are likely your position will be worse 90 days from now than it is today. If you are a seller? Well, my advice for you depends on another question. Are you also a buyer, if you are selling a home to buy another one, timing does not matter that much for you. Because you will end up making more possibly if you wait on selling your home, but you're gonna pay more on the one that you buy, it ends up being pretty close to a wash.

My advice to you for a buyer and a seller is buy the property you want. Base your timing on where you want to move and finding that right home. Do not base your timing on trying to guess the market. If you are a seller, and you're not buying something else, or you leaving the Southern California area, maybe to a market that has different market dynamics. If that is you. My advice would actually be that you take a wait and see approach, I do think you may be able to make a little bit more money if you wait 90 days and again only if you're not buying something else. Because if you're not buying if you're buying something else that takes away your gain. Anyhow, welcome to 2024 I think the next 90 days are going to be a bit of a doozy. We're kind of poised for that growth.

Like I said everything's pointing in that direction. We've got the charts and the data. To prove it. It's almost all pointing in the same direction, which is a tightening market with higher prices. As always, thanks for watching. If you like the videos that we do, please do support the channel by subscribing. But even more importantly, we want your comments, your real estate questions and we would love to work with you. So definitely hit us up. Thanks so much for watching. We'll see you again real soon.

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