What a 4% interest rate with today's changing inventory means for you. 

In that swinging pendulum known as Los Angeles Real Estate, it seems that it swings and skews to sellers (seller’s market) and sometimes buyers (buyer’s market) but rarely settles in the middle.

Until now.

I haven’t seen market dynamics like this for a while.

Two months ago, I was predicting the market was nearing a happy equilibrium.

And the latest housing data confirms a trend that the pendulum is slowing down and settling on a balanced market.

Here’s what I’m seeing.

Month’s supply: If no new homes were listed for sale, how long would it take to sell all existing homes on the market? Month’s supply answers this question and refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, 4-5 months of supply for Los Angeles is associated with moderate price appreciation and a lower level of month’s supply tends to push prices up.

So when we say there’s 1.9 months of supply, we are saying that at the current sales pace it would take just 1.9 months for housing inventory to be depleted! And this typically leads to:

• More competition over homes
• Higher bids and bidding wars
• Faster moving deals because the competition is fierce

….sound like a seller’s market?

Now when the month’s supply rises above 4-5 months in a market like Los Angeles, here’s what happens:

• Less competition and lower bids because homes have been on the market for a long time
• Fewer or no  bidding wars
• Slower moving deals with more deliberation

…sound like a buyer’s market?

Los Angeles has been red hot for quite a while where the 4 month moving average for month’s supply never broke 1.5 months and most of the time hovered right at 1 month.

But the recent trend line (see month’s supply chart below) is starting to point in one direction – and that is up.

Now, one could deduce we are on the cusp of a buyer’s market but there’s another factor to take into consideration…and that’s interest rates.

U.S. mortgage rates just rose to 6.29%, the highest in 14 years.

Compare that to under 3% at the start of the 2022.

We have hit a very delicate balance in the scales of power where sellers and buyers equally have control of the wheel. We're now in a BALANCED Market!

Prices are still increasing and projected to appreciate around 5-7% annually, and interest rates are at all time highs. So sellers are still selling their homes at a great price, and buyers don't have to deal with every single home in a multiple offer situation since these high interest rates are pushing buyers out of the market. 

Now, imagine this competitive advantage: having all those options due to more inventory COMBINED with a lower interest rate than the majority of the market is getting. 

PRO-TIP: Ask me how I can connect you to interest rates in the range of 3.9% to 4.5% based on your situation.

Welcome to a BALANCED MARKET... you're going to need a great realtor on your side to help navigate!

And now for the latest data on Los Angeles County real estate trends:

Single family homes  I Los Angeles County I August 2022

New Listings: 4,573 (Down 21.67% year over year)

Homes Sold: 3,388 (Down 27.58% year over year)

Median List Price: $899,900 (Up 2.74% year over year)

Median Sales Price: $906,500 (Up  0.17% year over year)

Median Days on Market: 17 (Up 54.55% year over year)

Average List Price: $1,309,453 (Down 3.07% year over year)

Average Sales Price: $1,303,256 (Down 4.85% year over year)

Average Days on Market: 26 (Up 18.18% year over year)

List/Sell Price Ratio: 100.6% (Down 3.32% year over year)

Condo homes  I Los Angeles County I August  2022

New Listings: 1,659 (Down 27.49% year over year)

Homes Sold: 1,250 (Down 30.01% year over year)

Median List Price: $658,500 (Up 9.78% year over year)

Median Sales Price: $662,000 (Up 6.17% year over year)

Median Days on Market: 18 (Up 50% year over year)

Average List Price:  $820,096 (Up 9.03% year over year)

Average Sales Price: $819,131 (Up 7.342% year over year)

Average Days on Market: 28 (Up 12% year over year)

List/Sell Price Ratio: 100.5 (Down 1.76% year over year)