In recent reports, I’ve mentioned that everything is about perspective. I guess you could say that about any news or information, which continues to be true in housing. Take, for example, some headlines and articles published in the Press Enterprise. A week ago, the headline was “January Housing Sales Hit Record Low,” and the article cited how sales had dipped to the lowest point in 35 years. Not the most positive news. However, a few days before, an article headlined “6%-plus Mortgage Rates Historically Low” was published. The article said, “Mortgage rates today would be at 8.9% if they were priced according to this century’s typical spread above the inflation rate,” and continued, yes, 6% plus mortgages will throttle home sales.”
A completely different picture of the marketplace. I also contacted a few REALTORs® across the region and asked what they were experiencing and if they were seeing a change from even a few months ago. While some said they had challenges getting their listings sold, others shared how they received multiple offers even after one weekend of an open house. So what’s real? What is happening in our market? I believe all the above is true. Higher mortgage rates are affecting some buyers but not everyone. Low inventory creates competition leading to multiple and competing offers, but only if the home is appropriately priced. All the more reason to be sure you are working with an informed and educated REALTOR®.
As we dive into the data for our region, we see continued decline in median prices in individual cities but an increase overall in the area. How can almost every city show declining numbers, but the region shows an increase? Remember, the median price reflects the price directly in the middle of the lowest and highest sales.
For now, let’s take a closer look at the numbers for our region from February 2023.
The median home price in Southwest Riverside County increased 2% from the previous month ($555,000/$545,000) but is down 5% from a year ago ($584,250). Comparing the median price to where it was 2 years ago, it has increased by 15.7% when the median price was $479,500. So even though there has been a recent decrease, if you purchased your home 2+ years ago, you still see positive growth in your home’s value. Unsold inventory remained at 4 months (6 months is considered a healthy market), and the median time on the market decreased for the first time in almost a year to 41 days. This is up from 9 days last year and significantly higher than 2 years ago when it was just 6 days. Unit sales increased 9% from the previous month but are down 33% from last year.
Unsold inventory decreased again from the previous month by 13% but is up from last year, with an increase of 52%. As I mentioned earlier, median prices decreased in all but one city in the region, with a total median price variance from -9.3% to 0.9%. Total sales volume also increased in February by almost $39 Million.
On the legislative side, we have passed the bill introduction deadline and are busy reviewing all of the bills. In case you’re wondering, a total of 2,749 Bills have been introduced this year! As we make our way through them all, I can assure you that we will once again be playing more defense, opposing bills that attack real estate and private property rights. There will be a few good ones out there, and we will support those and encourage our legislators to vote in favor. One bill that I’m excited about coming back is a Federal bill co-sponsored by a Democrat from California and a Republican from Pennsylvania. With bipartisan support, we are hoping to see this bill become law.
Currently, the capital gains tax exemption is limited to $250,000 for single filers and $500,000 for married filers and has been set at that amount since 1997. This new bill would raise those amounts to $500,000 for single filers and $1,000,000 for married filers and would also index the exclusion for inflation. If passed, we believe this will help many homeowners and increase available inventory. As such, the bill has been referenced as the “Make More Homes on the Market Act.”
I will be flying up to Sacramento at the end of the month to meet with our State Lobbying team to get a better list of which bills we will be supporting and which we will be opposing, and I will keep you updated on that progress moving forward.
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…