What the Richcession Means for the Housing Market

A new year opens the door to new opportunities but it is still too early to determine what exactly will happen in the real estate market as we inch towards the Spring season. 

Inventory still remains low in LA and Orange County, but it is clearly evident that home prices across Southern California are slipping as a result of higher mortgage rates. So Cal home sales during the fourth quarter of 2022 according to CoreLogic fell to 13,016 units in November— a 44% drop in transaction compared to the same time the year prior. 

With that said, we are seeing all sorts of creative moves from both sellers and buyers to make the sales process as smooth for both sides as possible— from seller financing options to longer escrows for buyers to have more breathing room to make the most informed decisions for themselves are just some of the many ways deals are getting done. 

We are also seeing different banks offer attractive lending programs to make the numbers work for home buyers which has resulted in a boost of confidence for both sellers and buyers.  

What We're Reading

There is a lot of talk about the current recession and its impact on the jobs market and the housing market. In fact, there is a term being tossed around recently called the "Richcession" to suggest that the wealthiest are affected much more this time than the middle- and lower-class. One example is that unemployment numbers have improved overall despite there being layoffs at many of the large technology companies such as Meta, Twitter and Salesforce. In addition, the stock market has taken a tumble in recent months which directly impacts the wealthiest individuals more than anyone else. As a result, housing at the higher end may slow down as these individuals decide to wait it out during these times of uncertainty. However, those below the wealthiest class may sense more job stability and confidence in the economy, thus enabling them to buy or sell homes with much more confidence and ease. The article on Richcession by WSJ can be found here.

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