What’s happening in the housing market?
Question of the week: What’s happening in the housing market?
Answer: October saw the biggest increase in month-to-month home sales in California in the past 40-months, up 4.7% from September and up 9.5% from last year. With the increase in sales came an increase in the statewide median home price ($888,740) by 2.4% from September and 5-8% higher than a year ago.
More locally, LA and Orange County also saw large increases in sales, but drops in median prices from September.
In Los Angeles County home sales were up a whopping 23.1% from September and 10.9% for the year. The $956,200 median sales price was down 0.4% from the prior month, but up 7.0% from 2023; the monthly decline was the fourth drop from month-to-month this year.
Further south, in Orange County, sales surged 12.3% from September and were 14.8% higher than 2023. The $1.35 million median sales price was 3.4% lower for the month, but up 5.9% year-to-year; it was the second month in a row for a decline in the median price and the third decline in the past four months. Orange County’s median price hit a high in June of $1.45 million.
The jump in sales in October is directly attributed to the drop-in interest rates in September—buyers locking in rates in September when entering purchase contracts and closing in October.
Some statistics nationally for home buyers sees a significant change in who is buying homes.
First time buyers are at a record low of 24% of the market. Single women consist are 20% of first time buyers (FTB), more than twice the number of single men.
Another all-time low was seen in the home buyers with kids under the age of 18, only 25% of the market.
Traditionally the median FTB are in their late 20’s. With the increase in prices and rates, the median age from 2023 to 2024 has risen to 38 years old. That is ten years of wealth creation in homeownership being missed by those in their 20’s who traditionally would be entering the housing market.
Showing the lack of move-up buyers in the market, the average of a home seller has been 63 years old, up more than 10 years from prior markets cycles.
Regarding wealth creation, American homeowners have $35 trillion in equity, that is almost 28% higher than our national GDP in 2023, and twice the equity in homes prior to the 2008 crash. The average amount of equity nationwide is $315,000, up from pre-Covid equity of $186,000.
Move-up buyers have been noticeably absent from the market, a major factor in rising prices, and equity growth. The data does not support an significant increase in move-up buyers as 70% of homeowners with a mortgage have a rate under 4.5%, 25% under 3%. Hard to decide to sell you home and see your mortgage rate go up, possibly double.
Note that 40% of home owners own their homes free and clear.
The housing market responded as expected to rates dropping in September when they hit their lowest rates in two years.
As commented on in prior editions of the WR&MU, the economic and political environment do not portend a significant drop in rates in the near, or medium, future absent a significant event domestically or globally. The question to be answered is when will interest rates, prices, and potential buyers’ incomes and funds available for purchase, converge so that home sales increase.
With unsold inventory at 3.1 months and median days on the market at 25 days, both up 25% from a year ago, we could see a softening of the market in the early part of 2025 that could move more homes—depending on rates and if prices do soften, how much.
Schedule an appointment to discuss your options if you are considering purchasing a new home or property or refinancing an existing one and want to know the mortgage options available to you.
Have a question? Ask me!
Rates for Friday November 22, 2024: Not a lot of rate impacting economic new this week. As result fixed rate markets (bonds, mortgages) moved a bit sideways this week. The result is conforming rates are down this Friday following last week’s spike.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 6.50% Down 0.125%
30-year high-balance conforming 6.875% 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.
Off and on through the past several years I have written in a journal, The Gratitude Journal. It is described as the 5-minute journal for “more happiness, positivity, affirmation..” And when engaged in the thought and reflection in the morning and evening it does fulfill those promises.
As we approach Thanksgiving, I have re-surfaced my journal after taking a too long of a break and realize, again, I have much for which to be thankful and grateful. It is my hope has you gather for Thanksgiving with family, friends, whomever, you too have an abundance of people, circumstances and surroundings to fill you with thanks and gratitude.
Happy Thanksgiving,
Dennis
