Welcome to another edition of the REALTOR® Report! I can’t believe we are already into the year’s second quarter! March was an extremely busy month across the board. In addition to covering the data for our region, I will also discuss the many REALTOR® headlines you’ve been reading and provide some legislative updates.
On March 15, 2024, the National Association of REALTORS® reached a proposed settlement that would end litigation of claims related to commissions. The media quickly responded with various misleading and false headlines and information. While there are many layers and intricacies, let me set the record straight on how this potentially changes the real estate industry.
First, nothing is final yet. This proposed settlement still requires approval from a federal judge. The preliminary approval is expected later this month, with the final approval expected at the end of the year. That’s critical because things could still change depending on how the judge rules.
Now, how would this settlement change the industry? The most significant change is that commissions offered to the buyer’s broker and currently listed in the MLS would no longer be allowed to be listed in the MLS. Commissions have always been negotiable, and sellers and their listing broker have always decided how much commission would be paid and how much, if any, would be offered to a buyer’s broker who brings a qualified buyer and successfully closes the transaction. That doesn’t change. However, the change would require that discussions on commissions occur up front so sellers know who they are paying and how much, and buyers know what their agent expects to be compensated and how. Sellers will still have the option to offer a commission to a buyer’s broker. Buyers can also pay their broker directly or a combination of the two. Those negotiations will continue to take place, just outside of the MLS.
The other change would be that all buyers working with an agent must have an agreement up front and in writing. Some agents have been doing that already, and some have not. This settlement would make it mandatory. That agreement would list how much the buyer’s broker expects to be compensated so there is no surprise or varying expectation later. Anyone who has sold a house most likely signed a listing agreement before listing their home for sale, and that agreement addressed commissions paid as part of the transaction. The proposed requirement of a buyer’s representation being in writing is essentially the same thing, just on the buyer’s side.
Many questions are still out there, and things are being heavily reviewed and discussed daily. The important thing to note is that while things may look a little different, and there will be a need to educate everyone and explain the process, the real estate industry isn’t going anywhere, and the benefit of using a licensed REALTOR® remains clear.
As we look at some of the housing numbers, I’d like to highlight a couple of things. You may recall that January 2024 was one of the slowest months since I started this report a few years ago. Things picked up in February, and that momentum continued into March. The sales volume in Southwest Riverside County was over $110 Million more in March than in February and over $180 Million more than in January! Year over year median prices also significantly increased, with almost half of our cities seeing close to or over double-digit increases.
Let’s take a closer look at the numbers for our region from March 2024.
The median home price in Southwest Riverside County improved by 1% compared to the previous month ($601,495/$593,284) and improved by 7% from one year ago ($560,000). Comparing the median price to where it was 2 years ago, it has increased by 1.4% when the median price was $593,378. Unsold inventory decreased to 3 months, still a ways off from the 6 months that is considered a healthy market. The median time on the market decreased to 16 days, down from 23 days last year but up considerably from 2 years ago when it was just 8 days. Unit sales increased 24% from last month but are down 5% from the same time last year. Unsold inventory increased 9% compared to the previous month and is up 22% from last year. Median prices were up in all but one city covered in my report, ranging from -0.4% to 13.1%.
On the legislative side, we are geared up for another big year of playing defense. I just returned from Sacramento and met with our State lobby team. While bills are still making their way into committees and hearings, we discussed 23 Bills. 2 are ones we have already defeated, 6 are bills we support, and 15 are bills we oppose. Most of those we oppose deal with tax issues and property management. We are hoping to defeat these bills in committee before they reach the floor for a vote, but we will fight them all the way if necessary. The REALTORS® will attend a Statewide Legislative Day in Sacramento at the end of the month, where over 2,500 REALTORS® will meet with their legislators to continue fighting for private property rights.
On a final note, there continues to be a nationwide shortage of homes being constructed, with California leading the way as the state with the most housing needed. However, if you’ve been driving throughout our region, you know that there is a lot of development and construction planned and being completed. I contacted each city and asked them to provide me an estimate of single-family units currently under construction and how many were already approved or in the planning process. The first number is pretty easy to get, although not everyone was able to separate single-family from residential in general.
The second figure is more of an estimate, as projects are always coming online but not necessarily completed. However, it does give us an idea of the amount of interest from developers and demand from buyers in each city. I don’t think you’ll be surprised by the amount in the pipeline, especially in cities like Menifee, Hemet, and San Jacinto, which are projecting the highest number of future construction.
This was a longer report than usual, and while my intention is to keep them short and easy to read, there was a lot to cover. Having said that, 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®
