January 27, 2021
By Saeed Ghaffari
Saeed is the founder of Money, Real Estate & More. With over 30 years of experience as a lender, investor and a real estate professional, he provides free consulting in these fields. To connect with Saeed, sign up for free / log in on moreandmorenetwork.com and send him a private message.
MLS Data provided courtesy of Real Estate Legends, USA
Closings are down, Coming Soon are up, New Listings are down and so are the Active Listings in So Cal. What cdo we make of it?
The Active Listing Inventory is down in all counties except for Ventura. Riverside leads the region with 6.13% drop and Ventura is the only county with the rise of 3.46% in Active Listings. The average for the region is -3.30%. The New Listings (Listings with 7 days or less on the market) are also down in every county except for Ventura again, which has 34.4% rise in New Listings. Orange has the lead with 10.43% drop and average for the region is -5.4%. The number of Active Listings with 100+ days on the market is also down for So Cal by 1.74%. While the drop in Active Listings and New Listings on the market is not a good sign, the drop in the Active Listings with 100+ days on the market is good news for the market.
Speaking of good news, the Coming Soon inventory, the promise of new listings is up in every county. San Diego leads the pack with 25% followed by San Bernardino, Riverside, and Orange, all with double digit rise, 22.97%, 18.03% and 17.28% respectively. The average for the region is 15.07%, making up almost 5 times the drop in Active Listings and 3 times the drop in New Listings inventory.
Unfortunately, the Closings were down in all counties monitored in this report. The highest drop was 25.64% for San Diego and lowest belonged to Orange at 11.78%. The region averaged 19.43% drop in Closings. Considering the data covers less than 3 weeks past the holidays, the drop in closings may seem a normal drag coming out of the holiday season.
With all the data reported above, the ratio of the New Listings to the Active Listings suffered 1.45% drop form one week to another. In my opinion, this is the key indicator of the market trend and in this case, the drop is insignificant.
Let’s take a quick look on whether one should buy or sell in current conditions. The increase in Coming Soon listings by 15%+ is an indication that many people believe it’s time to sell. Why so? A couple of factors need to be looked at. One, generally, real estate goes through a cycle every 10 years. The last major drop in values were between 2008 and 2010. If the cycle is to repeat itself, we are due for another drop sometime soon. Two, the interest rates have been down at historic lows and though they are not anticipated to take a major hike, but with even a small increase in rates, the consumer’s purchase power will drop somewhat, affecting the pool of buyers in the market. With the above in mind, if you choose to put your property on the market, it would be considered a smart decision.
From a buyer’s point of view, another couple of factors need to be considered. First, rates are at all-time lows, lending guidelines are fair and one’s purchase power is at all time high. Second, despite the pandemic and real estate cycle concerns, most economists forecast an increase in values. And if one’s purpose for purchasing a house is improving living condition, it makes buy now a smart choice. If you bring in the investment aspect of the purchase in your consideration, then the scale tips to a 50/50 mark.
Arriving at a smart decision to buy or sell calls for a thorough analysis of one’s financial status, personal and financial objectives and consideration of market conditions specific to the location of the property obtained from an experienced and seasoned real estate professional.
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Table below shows the impact of the market trends and factors on our economy, ECON 101
Active Inventory listings dropped by 3.3%. Advantage: Sellers
New Listings dropped by 5.4%. Advantage: Sellers
Listings with 100+ days on the market dropped by 1.74%. Advantage: Seller
Coming Soon properties increased by over 15.07%. Advantage: Buyers
Closed Listings dropped by 19.43%. Not good for anyone!?
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Something big is happening in the U.S. housing market—here’s where 27 leading research firms think it’ll take home prices in 2023
Something big is happening in the U.S. housing market—here’s where 27 leading research firms think it’ll take home prices in 2023 Do you like this Article ? Sign up HERE for your FREE M&M Account to receive more Real Estate related information and news and THIS...
California Buyers Still Can’t Afford Homes
The issue for California residential real estate remains the same. Poor affordability means that despite latent demand, buyers can’t afford the prices of homes in the Golden State. For that reason, many have left to find much cheaper homes in other states. Unemployment will likely be on the rise along with lower business profitability (tech sector continues to lay off workers) which means fewer buyers are likely for 3 to 6 months.
The stronger consumer optimism is running against sticky inflation and a likelihood the FED can’t lower interest rates. But will that discourage buyers in California? Demand is always intense in CA. No other place offers what California has, and buyers today do seem to put lifestyle at the top of their list.
The luxury housing market, like most other real estate sectors, is adjusting to a slowdown. Affordability and home size are every bit as much on wealthy buyers’ minds as other consumers. “The reality is we are coming out of one of the best real estate markets in history,” Gary Gold, a luxury property specialist with Coldwell Banker Realty in Beverly Hills, Calif., notes in the latest Coldwell Banker Global Luxury Trends Report. “But that level of demand and price appreciation wasn’t sustainable.”
Nearly 90% of respondents to the Coldwell Banker survey say they believe the real estate market will be better than or the same as 2022 for property investment. The following emerging trends were noted in the report.