Median home prices reach new all-time high in March with two-thirds of homes selling above asking price.

Last month, the question on everyone’s mind was whether strong buying interest would continue despite the mortgage rate increase and an already depressed inventory. We were starting to see just a bit of moderation due to the mortgage rate spikes. But then in recent weeks, mortgage rates started to drop again and overall market sentiment continued to improve.

The result? Intense competition drove state wide median home prices to reach a new record high in March, and sales momentum remains strong heading into the spring home buying season.

State-wide home sales: Existing, single-family home sales totaled 446,410 on a seasonally adjusted annualized rate, down 3.5% from February and up 19.7% from March 2020. This year-over-year, double-digit sales gain was the eighth consecutive month of sales increases with the gains going back to closer to 20% year over year. While still solid, the monthly sales decline was the third in a row and the huge year over year sales gain is partly attributed to the state of the market a year ago just as Covid-19 put an abrupt halt on real estate and the rest of the economy.

State-wide median prices:  After dropping below $700,000 in January and February, California's median home price shot back up to $758,990 – up 8.6% from February and up 24% from March 2020. This year over year gain was the highest since October 2013 and the eighth month in a row for a double digit gain.

What’s happening with inventory? The unsold inventory index indicates the number of months it would take to sell the supply of homes on the market at the current rate of sales. The unsold inventory dropped from 2 months in February to 1.6 months in March. Year over year, the unsold inventory index was down significantly from 2.7 months in March 2020. Homes continue to fly off the shelves as active listings dropped 51.1% year over year. This is now the 3rd consecutive month that listings declined more than 50%.

 "With the U.S. economy positioned to grow at the fastest pace since the early 1980s and mortgage rates trending down again in the past week, consumer confidence will improve further, so in the coming months, we should continue to see a solid bounce back from last year as the market maintains its momentum."

C.A.R. Vice President and Chief Economist Jordan Levi

What’s happening in Los Angeles County?

In past months, the state wide trend has largely mirrored what’s happening in Los Angeles although there are definitely variations between single family homes and condominiums. Compared to the rest of the state, Los Angeles County's housing market remains hot with median listing and selling prices gaining both month over month and year over year. 

For single family homes:

• 5,764 homes hit the market in March, up 29% year over year and up 20% from February.
• 4.489 homes were sold in March, up another double digits - 35% year over year and up 29.5% from February.
• After three consecutive months of dips and then a slight bump, median listing prices (the point at which one half the homes list for more and one half list for less) shot past $800k to $845,000 a .5.3% bump from February’s median listing price of $799,999, and a 19% increase from March 2020.
• Median Selling Price (the point at which one half the homes sell for more and one half sell for less) also trended higher, growing to 871,000, a 5.33% increase from February’s  median selling price of $799,999, and a 19.18% increase from March 2020.
• There's the list price (what the seller hopes to get) and the sale price (what they actually get). Like a broken record, the list/sales price ratio keeps staying above 100% - at 102.9% in March. 
• Shrinking inventory didn’t stop potential home buyers from competing for homes. Both median and average days on market dropped from last year meaning homes continue to sell at a faster rate: 11 median days on market versus 16 from March 2020, and 29 average days on market versus 38 from March 2020.

For condominiums:

• 2.442 new condos hit the market in March, up 18.67% from February and up 57.65% year over
• 1,895 condos were sold in March, up 46.6% year over year and up 30.87% from February.
• Median listing prices (the point at which one half the condos list for more and one half list for less) were at $585,000 for condos, up 3% month over month and an 8.5% increase from March 2020.
• Median Selling Price (the point at which one half the homes sell for more and one half sell for less) also jumped to $597,000, a 3.7% jump from February’s median selling price of $575,000, and a 10.56% increase year over year.
• There's the list price (what the seller hopes to get) and the sale price (what they actually get). In February, we’re continuing to break above the 100% list/sales price ratio with a 101.3% list/sell price ratio.
• Unlike prior months where condo-townhomes were selling slower than single family homes, the gap is starting to close and the relative pace of condos is starting to speed up with 14 median days on market versus 18 from March 2020, and 34 average days on market, versus 37 from March 2020.  

What this means for you:

A trifecta of forces could bode well for the spring home buying season: 1) The continued shortage of homes is pushing up prices. 2) Covid-19 restrictions being lifted in the coming months means that more sellers will feel more comfortable listing their homes. 3) Mortgage rates trending down in recent weeks.  Based on what’s happening in my business, here’s what I’ve observed. On the fence or reluctant buyers feel a sudden sense of urgency and are back in house hunting mode as the cost of borrowing money goes up and down but interest rates are still above record lows. This initial wave of more on the fence buyers entering the market will put more pressure on inventory, creating even more demand for properties. For sellers, there is still a window to capitalize on strong buyer demand. For any fence sitters, now is the time to get off the fence!