Welcome to another edition of the REALTOR® Report! This is always a busy time of year for me and those REALTORs® that also participate in our State and National Legislative Meetings advocating for homeownership and private property rights. With the housing market continuing to face challenges, we must continue fighting the good fight and making our voices heard, especially to our lawmakers who have an influence on potential changes!
Last week, over 2,500 REALTORs® attended our annual Legislative Day in Sacramento. We were all there to meet with our Senators and Assembly members on a couple of hot issue items and to remind them how vital increasing supply and affordability is to our communities. Last month, I mentioned the California Dream for All Program, a shared equity down payment assistance program funded by the State. Even though $500 million was previously approved in the budget, the governor cut the program to $300 million, and the money ran out in just 11 days! During our meetings, we asked for the entire budgeted amount to be made available as it’s clear there is a high demand for the program. Additionally, the Democratic Senate Caucus has introduced its budget for next year, and there is an ask of $800 million more for the program. So if we can help push our legislators, that’s $1 Billion in funding for this program! We also discussed a bill that would weaken and eventually eliminate the Costa Hawkins Rental Housing Act, dramatically expanding the number of properties subject to extreme rent control. We already have statewide rent control and know how bad it is for communities. In fact, most of the time, it has the opposite effect that those advocating for it intend. Rent control reduces incentives for landlords to maintain housing, reduces incentives for developers to build new housing, and decreased supply often raises rent prices, to name a few. So it was important that we shared this data and asked our Senators and Assembly members to oppose this bill.
This week, we are in Washington DC, doing the same thing with our US Senators and Members of Congress. Our talking points are a little different, but the goal is the same; promoting homeownership. We will be reminding them of the millions of units that haven’t been built in the last decade, which is keeping the supply low and the prices up. Affordability is another critical issue we will be discussing. You may have seen recently that those with good credit will be paying more than those with bad credit when it comes to mortgage loans. This is defined as loan level pricing adjustments or LLPA. While it’s not as clear-cut as that, there is some truth, and we feel that something needs to be done to address this right away. The National Association of REALTORs® (NAR) has met many times with the Director of the Federal Housing Finance Agency to express our concerns and has recently written a letter detailing the effect of the current policy. For my REALTOR® audience, I am attaching a copy of that letter. On behalf of the REALTORs®, those in the industry, and future homeowners, rest assured that we are making our voices heard and fighting to get this corrected!
I attended a great meeting today that discussed inflation and the national debt ceiling. It wasn’t the most positive meeting, but it was very informative. Some of the key takeaways are as follows:
- There is no argument raising the debt limit needs to be done, but how to get there remains a political challenge.
- If the debt ceiling isn’t raised by the June 1 deadline, we could see an instant recession. (A recession was mentioned multiple times, but all agreed it would be mild and short-lived.)
- Feds may have to raise rates again. Not because they want to, but to continue their effort to calm spending to combat the rising inflation
- While housing is just 5-6% of the GDP, the products and services that accompany it significantly impact the economy.
- The economy will be at the center of the 2024 Presidential Election
Let me be clear. These are just the comments and thoughts made at this forum, not my personal thoughts or a guarantee of what’s to come. But with my report coming out and having just attended the meeting, I wanted to share it with all of you.
Now, let’s take a closer look at the numbers for our region from April 2023.
The median home price in Southwest Riverside County increased 2% from the previous month ($569,000/$560,000), but it remains down 5% from a year ago ($600,000). Comparing the median price to where it was 2 years ago, it has increased by 10.5% when the median price was $515,000. Unsold inventory remained at 3 months (6 months is considered a healthy market), and the median time on the market decreased again by 9% to 21 days. This is up from 7 days last year and significantly higher than 2 years ago when it was just 5 days. After an increase last month, unit sales decreased by 16% from the previous month and are down 42% from last year. Unsold inventory increased from the previous month by 3% but is down from last year, with a decrease of 6%. Median prices declined in all but one city in the region, with a total median price variance from -12.8% to 0.5%. As I mentioned last month, one of the factors in median price decreases is the slowing of higher-priced home sales. In April 2022, 204 homes sold for over $750,000, while only 80 homes at that price point sold in April 2023.
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…