Are prices dropping?
Question of the week: Are prices dropping?
Answer: Yes and no, depending on where the property is located and what price range it is in.
The California Association of Realtors sales report for February sales shows some interesting data.
The big picture raw data shows statewide the median sales price was $829,060 in February, down 1.2% from January, but up 2.8% for the year; condos bucked the statewide trend showing a 4% increase in median price. Sales were very strong across the state, up 11.6% from January and 2.6% from last year.
Locally, the median price in Los Angeles County dropped 3.9% from January to $852,150, though still 4.3% higher for the past twelve months. Sales were 4.8% higher month over month, but 2.4% lower than a year ago. Factoring into the County’s sales and price data could be the Palisades and Eton fires in January, moving forward the data analysts will like parse the data to see what impact the loss of thousands of homes has on the resale market.
Down south, Orange County showed continued growth in prices as the median price was up 2.5% for the month and 8.6% from last February to $1,465,500, an all-time high. Sales were flat from last February but up 9.5% from January.
The difference in prices and sales between the two counties hi-lights a statewide trend. Sales of homes priced below $1 million fell for all price categories, the lower the price the higher the drop in sales. Sales for homes priced from one to two million dollars are up 2%, for homes priced over two million sales are up a whopping 18%.
The number of total sales statewide are at their highest level since October 2022. This is due in very large part to active listings being at a four-month high, and the most active listings in February since 2020.
The Southern California region had 4.1 months of unsold inventory on the market in February with the average time on the market of 30-days, both trending higher. For those homes selling, the sales price averages 99.4% of the listing price; homes have not sold over 100% of list price since the first half of 2022.
Statewide, 31.8% of listings have a reduced price, with the median revision being a 4.5% drop (or $45,000 reduction on a $1,000,000 initial list price).
Taking a home initially listed for one-million, the decline in list price, plus the sales percentage below price, approximately one-third of listed inventory at that price will sell for $949,270.
For buyers in the market, depending on the market price and location, the data shows there is room for negotiation on price, or likely more beneficial on terms. Next week we will cover why it may be better to pay list price and get concessions from the seller other than price.
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Cash registers weren’t running out of receipt paper in February. Retail sales increased 0.2% from January, whose sales were adjusted to -1.2%, missing the consensus of 0.6% growth in sales from sluggish January. With CPI running at 0.2% for February, while total sales went up, units sold were flat month to month. Pulling sales higher were internet sales, up a very strong 2.4% (likely due to cold weather keeping people from going to brick-and-mortar stores), and pharmacy sales up 1.7% (for that nighttime sniffling, sneezing, coughing, aching, stuffy head, fever, so you can rest medicine).
A concern in the report for the economy was the 1.5% drop in restaurant sales, the largest in 13-months. Restaurant sales are a strong gauge of consumer sentiment and household finances as dining out is discretionary spending that drops when people are getting tight on their budgets. Since retail sales are one-third of consumer spending, which is 65-70% of GDP, a drop in discretionary spending can lead to a drop in other spending, which can lead to a drop in GDP.
Not good…but…investors digging deep into the retail sales data found some kernels of goodness. One data set in the report is the “control group.” This data strips out auto sales, gasoline, building materials and restaurant sales and feeds into the calculations for GDP. In February sales for the control group were up 1%, suggesting that the sluggishness in retail sales may not be a drag on first quarter GDP. We will find out next month.
Rates for Friday March 21 2025: Overall a benign week for bond and mortgage markets, a bit of drifting during the week but we finish the week flat from last Friday.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 6.375% Flat
30-year high-balance conforming 6.625% Flat
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
Long time readers know that I rarely get political in the WR&MU, not that I don’t have my opinions but this is not the place to express them. That said, I will weigh in on a debate that was raging on Monday and Tuesday talk shows.
I had no problem with the NCAA Men’s Basketball Tournament selection committee putting the University of North Carolina Tarheels into the tournament and leaving the West Virginia Mountaineers out of the tournament. There, I said it.
I didn’t say what talk shows were having this raging debate!
