If you were to ask a REALTOR®, “How’s the market?” I am sure you would get varied responses with one huge similarity…it’s a very unusual market. As you will recall, when rates dropped to record lows, purchasing power became very strong, and many people bought homes. There was a huge demand, driving prices up and keeping inventory low.
Fast forward to today; you’d expect it to be the opposite. Less than two weeks ago, the Press Enterprise reported mortgage rates hit a 22-year high at almost 7.25%. Today, they have dropped very slightly but remain at above 7%. If the rates have more than doubled in a few years, we should expect tight spending, more inventory, and lower prices. That’s just basic economics. But what do we have today? Increases, although minor, in sales and median prices! The tight inventory drives that, and buyers are seeking alternative financing options to help get them across the finish line. Temporary buydowns, permanent buydowns, and even adjustable loans are common options for buyers trying to find a way to make the numbers work.
Even new construction communities are offering incentives that were once focused on closing costs and upgrades, now focused on buying the rate down. I will point out that while that option may work for some, it may not be the best option for everyone, so working with a trusted mortgage professional and REALTOR® is still crucially important. Talk remains that we will see a decrease in interest rates, but as it’s been proven all year, only time will tell.
I am happy to report that while some cities did better than others, August increased across all measured data for Southwest Riverside County.
Let’s take a closer look at the numbers for our region from August 2023.
After last month’s first decrease of 2023, the median home price in Southwest Riverside County increased by 2% from the previous month ($589,900/$580,000) and improved by the same percentage from one year ago ($580,000). Comparing the median price to where it was 2 years ago, it has increased by 7.3% when the median price was $550,000. Unsold inventory remained at 3 months (6 months is considered a healthy market), and the median time on the market increased to 14 days. This is up from 12 days last year and double the time it was 2 years ago when it was just 7 days. Unit sales also increased by 6% from last month but remain down 17% from last year. Unsold inventory increased from the previous month by 5% but is significantly down from last year, with a decrease of 41%. Median prices remained relatively flat in our local cities, with a total median price variance from -8.4% to 4.6%.
As is typical for our region, these increases do not represent California or the Nation, so you may hear different stories reported. If you have questions about these numbers or even a specific city, please reach out to me.
On the Legislative side of things, the REALTORs® are in a full-force Red Alert against ACA 13. Without getting too much into the weeds, ACA 13 directly attacks Prop 13 tax protections. With all of the talk about affordability in the housing market, or rather the lack of affordability, the last thing we need is an initiative out there that threatens to increase taxes on homeowners! We are also hoping for some consensus soon on a bill addressing the severe challenges around homeowner’s insurance. If a bill does present itself, we will be on board in support.
A few other impactful bills affect the business community, but since this is a REALTOR® Report, I’ll limit my remarks to those directly affecting real estate.
By my following report, the 2023 session will have ended. We are expecting many bills to roll over into the second year, and we can never count out the zombie bills. As always, I will keep a close watch for anything that affects us and update you accordingly.
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 detailed 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…
