How is the housing market now in terms of the numbers?

03/25/23

I looked at combined data from CRMLS for Los Angeles, San Bernardino, Riverside, and Orange counties as a representative sample for Southern California, and February’s numbers show signs of the market heating back up again.

Prices:

The median price rose slightly in February for all but Los Angeles County, which was down about 0.6%. Many people have been concerned about the decline in prices since the Federal Reserve implemented measures last year to raise interest rates. Since then, the median price has dropped between 14.1% in Los Angeles County and 7.5% in San Bernardino County. While that’s a dramatic shift, it’s not too crazy when we look at where we’ve landed compared to last year. Compared to last February, the four counties are down between 0.5% and 5.5%.

Inventory:

The number of homes for sale dropped a little bit in all four counties during February. That’s unusual for this time of year as many prospective sellers choose to wait until after the holidays to put their homes on the market, so we typically see more homes come on the market after New Year’s Day. Since this is the second month of declining inventory, it may be evidence that the SoCal market is heating back up.

Time on market:

The time homes are sitting on the market before a seller accepts an offer rose again just a little bit in February. The median is the one right in the middle, so median days on market tells us that half the homes sold faster and half took longer to sell. The median on-market time in January was between 26 and 40 days. That’s much slower than last year’s range of 7 to 14 days. Homes are most likely sitting longer because so many sellers have accidentally overpriced them, and it takes a couple of weeks for them to adjust and find the right asking price.

Supply from sellers vs. demand from buyers:

Buyers still substantially outnumber sellers in most SoCal markets. Months of inventory measures the relative supply from sellers and demand from buyers in the real estate market. Anything below five months of inventory is a seller-favored market, and anything above six months of inventory is a buyer-favored market. Right now, months of inventory ranges between 1.6 and 2.3 across the four counties, which is still seller’s market territory. We’re seen two months in a row of declining supply relative to demand, which is the best evidence that the market is heating back up. If this trend continues, we can expect stabilized prices or possibly slightly rising prices even in the face of moderately increased interest rates. This definitely doesn’t suggest a crash in prices in the near future.

What this means for sellers:

Sellers should be extra careful to avoid accidental overpricing. While multiple offer situations are still happening, they are less frequent and less dramatic right now. For the last few years, the intensity of the market provided more grace for overpriced sellers that weren’t too far off, but that’s not the case today.

Want to explore your options? Call or text Caleb at 626-328-4199.

What this means for buyers:

Buyers who have been waiting for the market to begin to shift can expect a little less competition and more opportunity to use down-payment-assistance programs. In the last few years, first-time buyers have struggled the most in competition with other buyers who have had more cash available. This is a great time for first-time buyers to connect with lenders and learn about their options.

Want to explore your options? Call or text Caleb at 626-328-4199.