Welcome to another edition of the REALTOR® Report! As of the date of this report, the REALTOR® brand has featured a lot in the media, and not everything is positive news. A verdict was issued in a Missouri case that named the National Association of REALTORS®, among other defendants, and media outlets and social media have been taking jabs at REALTORs® ever since. While I won’t get deep in the weeds on that topic, I will address it shortly.
As for some good news, the Feds once again paused raising interest rates, which led to some minor relief coming into the first week of November. Also, in anticipation of next week’s announcement of the 2024 conforming loan limits, lenders have started accepting conforming loan amounts up to $750,000, with the potential for even higher limits after the official announcement. Hopefully, both offer some assistance to those looking to purchase homes soon.
One question I get asked often is why are sales so slow right now? I have reported that we have a severe shortage of available homes, and even with all of the locally planned new construction, we are well behind the curve when it comes to building enough homes. However, there is another, much simpler reason. The record low interest rates from the past few years have essentially locked those owners into their current homes. Think about it: why would you leave your +/- 3% interest rate in exchange for today’s mid-7 % range? You wouldn’t unless you had to. So those owners who in another market may consider relocating purely out of desire aren’t leaving, thus adding to the inventory shortage. Sure, if you are being relocated or have another significant reason to move, you will, but it’s not what might be considered a typical turnover rate of homes.
Let’s take a closer look at the numbers for our region from October 2023.
The median home price in Southwest Riverside County had a slight improvement, up 1% from the previous month ($585,000/$580,000) and improved by 4% from one year ago ($560,000). Comparing the median price to where it was 2 years ago, it has increased by 8.7% when the median price was $538,000. Unsold inventory is sitting right around 4 months, getting closer to the 6 months that is considered a healthy market. The median time on the market was up to 16 days, down from 25 days last year but up considerably from 2 years ago when it was just 9 days. Unit sales did increase 8% from last month but are down 5% from last year. Unsold inventory also increased from the previous month, with a 9% increase, but remains significantly down from last year, with a decrease of 36%. Median prices expanded the range in price in our local cities, with a total median price variance from -16.4% to 10.5%.
Since the legislative session is done for the year, there’s not much to report. As done every year, the Southwest California Legislative Council has finalized its report card on the bills we tracked and how each of our elected officials voted on those bills. I am including the scorecard in this report and can provide more details to anyone who requests more detailed information.
Let’s talk about the verdict, as mentioned earlier, against the National Association of REALTORS®. This was a class action lawsuit in Missouri that involved plaintiffs raising questions about how commissions are paid. The jury sided with the plaintiffs and awarded damages of $1.8 Billion. This significant figure is why the case is making headlines. Unfortunately, the headlines also paint horrible pictures about REALTORS® and our industry. The verdict is being appealed and will likely take years to finalize. However, its impact has been felt nationwide and warrants this brief report. For the most part, transactions will remain the same here in California. There may be additional disclosures and new explanations of commissions, but business should continue as normal. One of the biggest challenges is demonstrating the value of a REALTOR® and understanding the crucial role they play in a transaction. For far too long, REALTORS® have downplayed the challenges of their day-to-day activities, resulting in a skewed perception of their value. Since the audience of this report is not all within the industry, I am sharing a document of 179 things that REALTORS® do during a typical transaction. I encourage my REALTOR® audience to utilize this tool and my non REALTOR® audience to realize how much value a REALTOR® brings to the table. This case is far from over and relatively complicated, so if you would like to discuss it in further detail, please reach out to me.
Even though we are heading into the holidays and the end of 2023, things remain busy. 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…
Adam A. Ruiz
Government Affairs Director
Southwest Riverside County Association of REALTORs®
