ve·loc·i·ty
noun: the speed of something in a given direction.
The speed of the market is no longer moving at an insanity-frenzied pace but it’s still strong!
There are few times when we see a market that is great for both sellers and buyers, but we are in one now!
• Sellers are taking advantage of an incredible equity build up over the last 3 years.
• Sellers are still assured their home will sell – especially if priced right – and their return will remain high as long as inventory (supply) remains low.
• Buyers are taking advantage of a slightly slower market time where sellers are more motivated to help with repairs, closing costs and longer escrows.
• Buyers will also still get the benefit of appreciation when other assets are contracting. A home is still the best hedge against inflation!
• Cash buyers are king.
Facts & Talking Points:
• Through May closed sales were down 22% year-over-year in Orange County and 14% in San Diego County. However, in both counties it exceeded both 2020, and was similar to 2019.
• In April, the median detached home sales price in Orange County climbed from $1,100,000 last year to $1,325,000, up 20.5% and in San Diego County from $825,000 last year to$975,000, up 18.2%.
• As higher mortgage rates have persisted with duration, it necessitates a careful pricing strategy to find success.
• Homes in inferior locations or condition need to be priced accordingly. Many homeowners are stretching their price and are overpriced, necessitating revisiting their asking price to find success.
• 27% of the current inventory in Orange County reduced the asking price and in San Diego County it was 25%. The number of price reductions has been rising from week to week.
• Buyer fatigue has set in as interest rate increase(s) have caused our frenzied market to lose A LITTLE velocity.
• Higher mortgage rates have begun to deter some potential buyers and demand has hit a plateau for the year and is no longer rising.
• Orange County had a 23-day inventory in April that has grown to 45-days. San Diego County had a 2-day inventory in April that has grown to 41-days today.
• Supply is going up, however haven’t even hit 2013’s lowest numbers!
• The market began its less phase following Easter weekend rather than the traditional week after the 4th of July.
• Tips for your buyers, get aggressive over holiday weekends. We saw a 40% decrease in showings over Memorial Day weekend. This is the first year Juneteenth
is a federal holiday. That, combined with Father’s Day, we will most likely see a dramatic decline in showings and contracts. Summer has distractions. Step up your buyer activity now.
• Only two of the last six recessions resulted in a loss of home value.
This week, the Federal Reserve increased their interest rate by .75%, the largest increase since 1994. The intent behind this increase is to slow inflation. In addition to raising the rates yesterday, they also announced that we could see another increase of the same amount in 30 days. As a result, interest rates on mortgage loans increased by about .5% on average. Remember: lead with the payment not the rate.
If you’re looking for more information about the real estate performance in many of Southern California’s most in-demand markets, click here to view the Pacific Sotheby’s International Realty IN FOCUS market reports.
Whether you are a first-time home buyer, an interested seller or building your investment portfolio, our reports are your best resource to make smart real estate decisions today.
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