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Real Estate Newsletter

MAY NEWSLETTER

Dear Friends and Colleagues,

The Los Angeles Real Estate Market is still breaking records but there are clear signs that the market is cooling. In a more broad sense, statewide the median price of homes also set another all-time high. Los Angeles home sales fell in April as rising interest rates and higher home prices depressed housing demand even as the statewide median home price set another record for the second straight month. In the City of Los Angeles, the median price increased to $801,860 up from $728,200 a year ago. Initial jobless claims have held steady and mortgage rates have increased this month to over 5% - while equities have taken a major hit in the month of May. Make sure to read our Market Update to learn the current state of affairs. We will continue to stay on top of the stats and lead indicators to help forecast what may be coming up. Review our Buyers and Sellers ADVICE section to best position yourself in this transitioning market. Please continue sending us topics of interest so we can cover them in future newsletters.

MONTHLY UPDATE

The LA real estate market continues to appreciate month over month, year over year. According to CAR, the City of Los Angeles saw the median sales price increase to $801,860 up from $728,200 a year ago.

 

Mortgage rates turned lower for the second straight week this past week, but it wasn’t enough to boost demand for purchase loans or refinances. Applications to refinance a home loan dropped 75% compared to the same week one year ago. Applications for a mortgage to purchase a home were flat week-to-week but down 16% from a year ago. With the rise in interest rates, many buyers have moved to the sidelines.

 

As we continue to get through the hot selling season - inventory levels are anticipated to stay low into the summer months. Sales are actually down 12.8% from last year due to the lack of inventory which has contributed to the buying frenzy we are still experiencing.

 

Although the median home price has increased statically, there is no doubt that the market is cooling. Where just a few months ago - we would put a property on the market and receive 30 offers, that same property today is only receiving 5 offers. Properties are still selling for over market value as many buyers are desperate to lock in a home ASAP, but we question how much longer this dynamic will continue. With rates jumping as fast as they have, many buyers have just fallen off because they can no longer afford the substantially higher interest rates / mortgage payments.

 

The market is definitely in transition. Rising interest rates are the catalyst of this current market change. As we are reporting statistics today which are based on the past - it'll be interesting to see how today's market will be reported statistically in the months to come. We will continue to keep an eye on all the important variables and indicators to help us understand what the future holds.

ADVICE FOR SELLERS

This is still a sellers' market due to the lack of inventory, but we are definitely in transition. Property values are the highest they have ever been, but demand is much lower today than just a few months ago when interest rates were much lower.

With this transitioning marketing, we are finding that many sellers are pricing their properties too aggressively, which is causing them to sit - with most electing to eventually go with a price reduction. We are seeing a lot more price reductions across the board right now.

Currently, we are also seeing a lot more properties than usual go into escrow but surprisingly, fall out after a week or so. A lot more buyer hesitation today than we have seen in the past, so it's important to do your due diligence on a buyer upfront - especially in a multiple-offer situation to maximize the chances of a successful close.

Many sellers are concerned that they won't have a home to purchase in this low inventory environment if they sell. Many buyers will allow a seller to utilize a rent back which should alleviate much of the stress of finding your replacement property! In many situations, being able to stay in your home just 30-60 days longer will be all you need to get everything situated.

Inventory is still very low and there are buyers out there still desperately looking for property. Proper marketing and pricing will be key to identifying that buyer and closing. If you've been on the market for 45 days + without an offer - it's definitely time to review your sales and marketing plan and make adjustments accordingly.

Contact us to learn more about pricing and how we can help you get your home looking its best and sold for top dollar!  

ADVICE FOR BUYERS

Buyers in this market must continue to stay active and aggressive to find a property. Although properties are still receiving multiple offers, the number of offers received by sellers on their property is drastically lower than just a few months ago due to the fast increase in interest rates.

If you have decided you want to buy a home, the rule of thumb has always been to purchase well in the market you're in, as opposed to trying to time the market. In my 18 + years of experience, I have yet to see anyone time the market correctly every time. Many buyers have asked whether it is best to wait until rates go lower or to wait for a market crash to then move forward on a purchase. Waiting for a crash that may never come could turn out to be disastrous. Ask the buyers who decided to put their search on hold in 2019 with hopes that a better market is coming.

Off-market opportunities and homes that have been on the market for 60 + days are still the best opportunities to get a good deal on a property.

For buyers who are having a hard time getting a loan because they are self-employed - there are many lenders who can utilize bank statements as opposed to tax returns to help borrowers obtain a loan. Especially now where fewer loans are being originated - lenders have come up with creative solutions.

Please reach out to The Adelpour Group to see what off market opportunities we may have for you and to share other strategies that have helped our buyers get into escrow on a home they love!  

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