SPECIAL REPORT: CURRENT STATE OF THE MARKET
So recently I have heard many individuals speak on the Real Estate Market. As an individual that is in the trenches, actively working in Sales, Listings and Real Estate Loans on a daily bases, I thought I would share my opinion.
First and foremost, let's talk about the BAD word that everyone is speaking about, Recession. Before I can comment on the recession, allow me to explain. A recession is TWO quarters of the Gross Domestic Product (GPD) showing a negative growth. In regards to the Stock Market, we also have seen TWO quarters of declining market due to some major factors (e.g. Furthermore, we have COVID, the war in Ukraine, and the stubborn inflation at 9.1%.). So, moving forward, we ARE in a recession.
Now, let's turn to the Real Estate market. Before I continue, allow me to explain the Supply & Demand rule. The less supply, the higher the price. The more supply, the less the price. Another factor is, the amount of supply we have in the market. A normal market is, 4 to 6 months supply of inventory. When we have a normal market, everyone has time to make a decision. Currently, in must suburbs of Los Angeles, the supply of homes for sale are 2 to 3 months. That is still considered low inventory, meaning higher prices. Until the supply get's back up to normal levels, we are going to see higher prices.
Moving forward to the amount of days on the market, in the City of Los Angeles and surrounding areas, we are still seeing homes being sold in 15 to 20 days.
However, the item that put the brakes on everything was the FED's (Federal Reserve) increasing the rates to the banks. Therefore, the banks increasing the rates to us the consumer. Now, for the individual that was in escrow and hearing all the above, of course they would get nervous, wouldn't you? I know, I would. We as humans, do not do well with change, and that's ok, that's who we are.
This caused a cancellation rate of 15% of all opened escrow to cancel. This gauge is called, the Pending of Transactions.
So what I'm seeing in the City of LA and surrounding areas is that homes are still selling at aggressive sales price and low inventory. But I'm also seeing areas outside the city of LA are being affected as well. I am seeing more inventory and sellers making concessions. What does that mean? Sellers are paying for closing cost and other items such as repairs which is not common.
In closing, nobody has a crystal ball and if you're trying to time the market you can get hurt (I did... LOL). So, if you need to buy a home for you to live in, I still think it's the right move because it's better to pay your mortgage versus paying rent.
Anyway, this is just my input. I truly hope this helps. Take care and if you need anything, I am here for you.