The first half of 2021 is in the books! What does the second half of 2021 hold?

After a bullish and impressive first 6 months of the year, market momentum is taking a bit of a breather. For the second month in a row, state-wide home sales dipped from the prior month but still higher than from a year ago. But as far as the first half of 2021 is concerned, capped by strong sales in June, the state housing market ended the first half of the year up 33.6%. Higher-priced markets continued to do well while sales of lower-priced properties remained below last year’s levels.

State-wide home sales:  In June, existing, single-family home sales totaled 436,020 on a seasonally adjusted annualized rate, down 2.2% from May and up 28.3% from June 2020.

State-wide median prices:  For the fourth straight month, median home prices set a new record, with a slight increase of 0.2% on a month-to-month basis to $819,630 in June, up slightly from May's $818,260 and up 30.9% from June 2020. The pace of growth in home prices may be slowing. The modest .2% month-over-month increase was the smallest gain in the past four months and well below the average May to June growth rate of 1% observed between 1979 and 2020.

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 went up to 1.7 months – more new listings added but still below pre-pandemic levels.

"On a year-over-year basis, the statewide median price increased more than 30 percent for the third consecutive month. Tight supply, low rates and the change in the mix of sales continue to be the primary factors pushing up home prices to record levels. However, we are expecting price growth to slow from this point on as the top end of the market begins moderating. With pending sales down for the first time in 14 months, closed sales – which have been declined 5 out of the last 6 months – will likely remain lackluster as the market enters the second half of the year."

-C.A.R. Vice President and Chief Economist Jordan Levine 

What’s happening in Los Angeles County?

For single family homes:

• 5,364 homes hit the market in June, up 29.82% year over year but down 3.95% from May.
• 4,792 homes were sold in June, up 46.45% year over year and up 4.92% from May.
• Median listing prices (the point at which one half the homes list for more and one half list for less) continued to shoot past $800k in June to $875,000 a modest bump from May’s median listing price of $849,000, and a 25% increase from June 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 $917k a 2.34% increase from May’s median selling price of $895,500 and a 29% increase from June 2020.
• There's the list price (what the seller hopes to get) and the sale price (what they actually get). The list/sales price ratio continues to stay above 100% - at 104.8% in June.
• Shrinking inventory didn’t stop potential home buyers from competing for homes. Both median and average days on market in June dropped from last year: 9 median days on market, down 55% year over year, and 21 average days on market, down 42% year over year.  

For condominiums:

• 2,313 new condos hit the market in June, up 4% from May and up 49% year over year.
• 1,892 condos were sold in June, up 5% from May and up 85% year over year.
• Median listing prices (the point at which one half the condos list for more and one half list for less) were flat at $600k month over month and a 17% increase from June 2020.
• Median Selling Price (the point at which one half the homes sell for more and one half sell for less) also jumped to $628,500, a modest.5% jump from May’s median selling price of $624,900, and a 22% increase from Jun 2020.
• There's the list price (what the seller hopes to get) and the sale price (what they actually get). In June, we’re continuing to break above the 100% list/sales price ratio with a 102.5% 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 in June with 11 median days versus 23 in June 2020 – a 52% decrease year over year. And 24 average days on market, versus 37 from June 2020 – a 35% decrease year over year.

What this means for you:

After a red hot start to the year, the market still seems to be holding a hot pace as the inventory to sell is still in starvation mode. Now with this new Delta variant, it may cause would be sellers to pause a bit to see how things play out. However, one thing that is of concern to investors, people pondering selling, and those who just don’t like giving the tax man any more than they should, is looming changes to capital gains, pass throughs, and other new tax laws that could rear their ugly head in 2021. It is motivating fence sitters to sell now so before they possibly go into effect.That could loosen up inventory!

Until next month...