I have been anxiously waiting to see the numbers for April to see the impact of the increase in mortgage rates. While there was a slight dip in closed sales, and some cities saw a small decrease in transaction value, the region as a whole had another solid month.
The median home price in Southwest Riverside County had a slight increase of 1% from a month ago ($600,000/$593,378), was up 17% from a year ago ($515,000), and up an impressive 44.6% from 2 years ago ($415,000). Unsold inventory is still hovering just over 2 months (6 months is considered a healthy market), and days on market decreased from last month to 7 days, up from 5 days last year but still significantly lower compared to 14 days 2 years ago. Unit sales dipped 7% from the previous month and 3% from last year. Unsold inventory saw a significant increase of 40% from last month and is up an incredible 81% from last year. However, don’t be misled! We are nowhere close to the inventory levels we need to be. Median prices are up in all of our local cities, ranging in an increase of 14.5%-32.2% Year-Over-Year.
I spent the last 2 weeks traveling to Sacramento and Washington DC for our State and National Legislative meetings. One of the highlights is always a presentation by Dr. Lawrence Yun, Chief Economist for the National Association of REALTORs®. I want to highlight a few of his remarks and have included some of his slides in this presentation. First, the topic of supply and affordability continues across the nation. An average of 20% appreciation and the increase in mortgage rates equals a 55% cost increase in the American Dream of homeownership. This cost doesn’t even factor in inflation, showing just how difficult it is for new buyers to enter the market. Some of the common questions I hear out there include are we going to see more foreclosures? Is there a housing bubble on the horizon? Are we headed into another recession?
We are seeing fewer foreclosures due to assistance with payments, and increasing values mean equity, which translates into standard sales vs. distressed sales. Dr. Yun does not believe there is a housing bubble on the horizon. Yes, median home prices are at a record high, but low supply and high demand are what is leading to the higher prices. Finally, a recession is unlikely, mainly due to the high number of available jobs. Overall, the outlook looks to remain strong in 2022. Unit sales are projected to drop by 9%, and home prices are projected to increase by 8%. I have included this slide at the end of this report.
On the Legislative Front, we have been extremely busy! This is the time of year when bills are quickly moving (and dying) through the committee process. I am happy to report that some of the bad bills that I have previously mentioned have died. AB 1771, a bill that would have imposed a 25% tax on the sale of a residential property in the first 3-7 years, died in committee. Another bill, AB 2710, would have required that any rental property (including a property that is owner-occupied but rents out a room) listed for sale would first have to be made available to the tenant or a defined entity and would have added up to a year before the property could be sold on the open market. This bill was pulled by the author and will not be moving forward. This bill was one of the Hot Issues we were lobbying while in Sacramento and is a great win and another example of the power of the lobbying efforts of REALTORs®.
Lastly, many of you know Walter Wilson, the other Government Affairs Director for SRCAR. After many years of service to the industry and the Association, Walter will be retiring at the end of the month. I have had the pleasure of working alongside him for many years, and I hope you will join me in congratulating Walter on his retirement. We appreciate all that you have done!
If you’d like a copy of my entire report including the mentioned slides, or to be added to the distribution list, please email me at Adam@srcar.org.
As always, I am available if you have any questions about the report. Until next month.