It wasn’t long ago that I commented that I felt like a broken record, and I’m sensing a déjà vu. Only this time, it’s a different tune. As the market has shifted, we are seeing similar trends continue for our region…unit sales are down, median prices are down, and days on market continues to rise. While this may feel like doomsday, it is not entirely time to run for the hills.
Let’s start with median home prices. A quick economics reminder, “median” refers to the middle point between the lowest and highest number. So, it’s possible, as you’ll see later in the report, that a region can be down, yet cities are still up individually. If you recall, a few reports back, I referenced multiple forecasts of a cooling down market, even a flattening. That’s what we’re seeing play out. There is no way we could have sustained the appreciation numbers we were experiencing the past couple of years. Many economists have reported that this correction is needed, and we are still in what most would consider a healthy market.
What is concerning is the continued rise in interest rates. At the beginning of 2022, we saw a significant increase in interest rates. It was believed that the substantial increase was to account for multiple fed rate increases throughout the year. Remember, fed rates and mortgage rates are not the same. Yet we have seen rates continue to rise throughout the year. Rate increases directly affect affordability, the number of qualified buyers, and increases inventory. We are currently up to about 4 months of inventory, which is still shy of what is considered a “normal” market.
I’m not trying to say that it’s all rainbows and puppy dog kisses, but I will continue to remind people that it’s not 2008 either. We are very close to where some of the economists I listen to and follow predicted we’d be as we are nearing the end of the year.
My advice for those in the real estate industry/market is to stay educated! Agents should follow market trends and be prepared to answer questions about what’s happening. Buyers and Sellers should work closely with their REALTOR® and lender to be informed and prepared as they navigate the buying and selling process. And everyone involved needs to communicate!
Let’s take a closer look at the numbers for our region.
The median home price in Southwest Riverside County was down 1% from a month ago ($573,000/$580,000) but was up 7% from a year ago ($535,000) and up 27.3% from 2 years ago ($450,000). Unsold inventory remained right at 4 months (6 months is considered a healthy market), and days on market increased again from last month to 22 days. This is up from 14 days last year and significantly higher than 2 years ago when it was 6 days. Unit sales decreased by 11% from the previous month and are down 32% from last year. Unsold inventory dipped slightly, down 1% from last month but is considerably up from last year with an increase of 80%. I’m happy to report that median prices are up in all of our local cities, ranging in an increase of 2.0%-20.3% Year-Over-Year. The percentages remain at a slower rate of gain, and I would anticipate similar trends for the remainder of the year.
On the Legislative Front, we had a reasonably successful year. Of the many real estate bills I tracked and monitored, 27 made it through crossover. We (California Association of REALTORs®) opposed 14 of those bills and played a lot of defense expressing our concerns. Of the 14, 11 died, and 3 were signed into law. As for the remaining 13 bills we supported, 6 were signed into law, 4 died, and the Governor vetoed 3. Not great, but we’ve seen worse. I imagine we will continue to play more defense once the new legislative cycle begins. With potentially many new faces, maybe we can start seeing effective changes in the housing industry.
Speaking of elections, we have been meeting and speaking with many of our local candidates. I encourage you to research, call, and meet up with the candidates in your area. Ask them the questions that matter most to you. We have endorsed some candidates, and I am including those at the end of this report. I am also including the recommendations from the Southwest California Legislative Council on the 7 ballot initiatives on the November ballot again. Please feel free to share! When it’s time to vote, be sure you do vote, and vote informed!
A lot is going on, and I hope I have covered everything that affects you and your business. Please let me know if I left anything out or if you need anything explained further.
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…