July 10, 2023
The Market Momentum This Summer
We are delighted to bring you some exciting highlights on the current state of the Greater Los Angeles and Orange County housing markets. As we delve into the luxury and ultra luxury home categories, we've observed a cooling trend in prices. However, in the $2mm to $3mm price range, there is a limited supply of options, resulting in multiple offers for homes in this category, regardless of the higher interest rate climate that buyers are experiencing today.
In the sub $2mm price range, the impact of higher interest rates is becoming apparent. Buyers are becoming more price sensitive, considering the implications on their monthly mortgage payments. The increased rates have made securing mortgages more expensive, giving cash buyers a noticeable advantage. Despite this, housing inventory levels remain low, intensifying competition among all buyers in this price range.
Historically, the month of July sees a flush of new listings hitting the market. Many sellers choose this time to make their move, capitalizing on the potential influx of buyers who are eager to settle in before the school year begins in September. Though we had a slower start to the summer selling season, we anticipate that buyers will actively start searching for properties again after returning from their vacations, further contributing to the market's momentum.
New Construction and Off Market Opportunities
Recent data shows that May had the fewest number of homes for sale on record, dating back to 2012 when Redfin’s market tracking began (see House Hunter’s Nightmare). One of the primary reasons that there is a shortage of sellers is because these homeowners do not want to give up the low mortgage interest rates that they have locked into. Moving out or moving up and purchasing new homes means these individuals will have to secure new mortgages that cost significantly more (30-year rates this week are averaging 6.81%).
Many homes that have hit the market this summer have been going into contract quickly and for full list price or even more. The excitement and competition for those homes is due to the low inventory of homes available for sale.
We recommend two options to purchase a home without having to beat out everyone else with your “best and final” offer. First, consider a brand new construction home that is one of many homes being sold by a builder. Their homes typically have set prices and are released in phases. It is usually first come, first serve. The price that you see is the price that you pay!
Second, and more difficult, are off-market homes that do not get listed on The MLS or Redfin or other real estate websites. An off-market sale can happen when there happens to be a match between a buyer and seller and there is no marketing to the general public. It also means that the home is usually not prepped or staged or showcased. This time savings and expense savings by the seller can often translate into a purchase price savings for the buyer, especially when there is no competition against other buyers to drive up the price.
For information on new construction homes or to help you identify off-market purchases, feel free to reach out to us. We have already completed several of these types of sales this year and we also have some Coming Soons that we can share with you!
Stay up to date on the latest real estate trends.
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You’ve got questions and we can’t wait to answer them.