18860 Nordhoff St #204
Northridge, CA 91324
My Blog
Q2: 2024- Los Angeles Housing Market Update
Posted On: April 20th, 2024 4:55AM
Can you believe we are in mid April & in Q2 of the year? Unbelievable!
In my real estate world the market has been keeping us on our toes and we are noticing a definitive difference between starter homes and the rest of the LA housing market. Allow me to share more.
As you know affordability has gone through the roof and the ones that are getting squeezed are first-time home buyers. Higher property values, with higher mortgage rates and fewer homes coming on the market in the entry-level price ranges is making things harder for the prime first-time home buyer, which are millennials. But there is more. Buyers may now run into an additional fee which is their real estate agent’s representative compensation.
I recently handed over keys to two different young couples; one couple had the sweetest 2 year old boy and the other couple was expecting their first child. These are the every day buyers that we are assist today. Millennials have been getting married and having babies and now want to own a home.
Unfortunately, with higher mortgage rates and higher home prices, many have been unable to purchase. Majority of last year and pretty much all this year, interest rates have been vulnerable and spiking up similarly like gas prices. For nearly two years buyers have been sitting on the sidelines, waiting for either home values to plunge or mortgage rates to drop. Yet, neither has occurred.
Taking a deeper look though, within the last few months prices above $750,000 have had a lot more activity than last year. See the chart below.
The data above illustrates the differences between starter homes and the rest of the market.
In 2024, through March, an extra 1,561 homes were placed on the market, 11% more compared to 2023. Yet, there were 4% fewer FOR-SALE signs for properties below $750,000. On the other hand, for properties above $750,000 an extra 1,749 (which is 19% more) of new listings were placed on the market. This is affecting the entry-level market which is suffering from a chronically low supply. As a result of the limited inventory of starter homes, the Expected Market Time for properties under $750k, which is the number of days from when the property goes live to when it closes, is 48 days. To paint a better picture of this, typically upon an accepted offer, the escrow time period is 30 days, which means homes under $750k are only lasting about 18 days active on the market before going pending.
For current homeowners, well they are “hunkering down” in their homes and are unwilling to move due to their current underlying, locked-in, low fixed-rate mortgage. Through March, 28% fewer homes are on the market compared to the 3-year average before COVID (2017 to 2019). Starter homeowners are even more inclined to stay put compared to homeowners in the higher price ranges. Many cannot afford to sell their homes and trade their low rates for today’s 7.4% mortgage rate. It simply does not make economic sense. According to the Federal Housing Finance Agency’s National Mortgage Database, 84% of Californians with a mortgage have a 5% or lower rate, 67% are at 4% or lower, and 30% are at 3% or lower.
With the recent Consumer Price Index (CPI) inflation report and other hotter-than-expected economic reports, this week rates spiked more than a quarter percent to 7.44% as of April 15th. We also saw a spike in active listing inventory which increased by 610 homes in the past two weeks, which is up by 8% in new listings. This is not unusual as demand typically downshifts a when rates rise, allowing the inventory to climb so we foresee inventory continuing to climb up if rates remain above 7%. We’ll see how that plays out as we move forward into quarter 2.
Like always, please know I am here to be of guidance with all of your real estate needs. If you know of someone who is thinking of buying or selling please forward this market update to them. It is truly an honor to be of service to you and your loved ones.
If you have any questions please call or text me anytime. My cell phone number (510)927-6588. One last note, if you need any plumbers, roofers, electricians, or are looking into estate planning, trust or wills, and/or investment opportunities I have amazing connections with other great professionals and would like to share my referrals with you.
Whatever it is I can do to help, I am here for you.
Wishing you a lovely rest of the week.
With Care,
