Hello, South Bay.
It’s November already, and the end of the year is not too far off. Well, the real estate market has changed, and it’s actually a good time for buyers. Stick around to the end and find out why buying a home right now might be just perfect for you.
Let’s look at median estimated home values around the South Bay. Now, median is where half the homes are valued more than the number and half are valued less in that area. They range from about $651,000 in Wilmington to just under four million in Rolling Hills. If you want some exact numbers for your neighborhood, contact me and I’ll send you out a custom report.
We also know what affects prices most is supply and demand. So let’s take a quick look and see what’s going on. The supply side is a combination of new homes coming on the market, plus the homes already on the market, and as far as we can see, new homes on the market last month was 395. Now that’s down 12% from last October, but overall about normal for this time of year, plus the active listings of 845, which is up 35% from last October, but it’s, again, about normal for pre-pandemic ranges.
The reason we see a little softening the prices is from the demand side. Looking at closings or sold homes, we only had 296 sold, which is 39% lower than last October, and as you see, it’s on the low end of the sale for the last five years. We also look at pending sales, those that are under contract but have not closed yet. This is down to 214, which is 51% less than last October, and definitely at the low end of the pending sales over the last five years.
Average days on market is 26, taking about 24% longer to sell a home than it did a year ago, but just getting back in the pre-pandemic normal range. The balance between supply and demand is best shown in our inventory of about 2.4 months of supply. Now, that’s up almost 85% over last October, so if no new homes come on the market, we would sell out our homes in about 10 weeks. This shows the return of a more balanced market. In most of the country, six months supply is a balanced market, but around the South Bay, we consider three to four months supply a good balance.
Now, if we take a look at what’s going on with prices, the average sale price around the whole South Bay is about $1,312,814, a little bit off the high, but still up 3.9% from a year ago, when home sales were going crazy.
Now, I mentioned at the beginning that this is actually a pretty good time for buyers to take advantage of the current market, if you’ve been trying to buy for the last few years or so, then you know how competitive it’s been to get an offer accepted. Now you have a lot more strength in negotiating an offer that is right for you. Sellers who have been indifferent to your wants and needs, because they had so many offers to choose from, now have to be a little more accommodating to get their home sold for maximum price. Yes, interest rates have gone up, making homes less affordable, but this is also an opportunity for many of you. For one, higher interest rates are softening prices, and demand, which may give you some opportunities you didn’t have a year ago. This may also allow you to negotiate some assistance with the purchase, such as repairs, closing costs, or even interest rate buy-downs.
Remember, you’re not buying an interest rate, you’re buying a home. If interest rates continue to climb, you will have saved money by acting now, and if interest rates fall, you can refinance to that lower rate in the future. If your plan is to live in the home for a long time, you should not be caught up in the current interest rates, but more so on what fits your family’s budget.
But even more good for buyers, buying a home is actually a quality of life purchase, benefiting you and your family in many ways besides what it costs every month. Yes, it costs more right now to buy, but once that cost is locked in, it will stay the same forever, unlike rent, which historically keeps going up here in Southern California.
My final thoughts are that rising inflation is actually a reason to buy. A home purchase shields and stabilizes your largest monthly cost, your housing cost, against inflation. Rents will continue to rise with inflation, whereas a home mortgage will remain the same, and build equity over time.
History also shows us that once inflation’s under control, we’ll probably see lower interest, giving you a chance to lower your payments in the future. But don’t wait until then, ’cause when interest rates go down, prices come back up. Don’t be afraid of all the media hype. No matter what the state of the economy, you still need a place to live, and build memories with your loved ones. Would you rather be doing that while paying off your home, or paying off your landlord’s home?
For questions on buying, selling, or investing, contact me so I can help.
Bye for now.