The Southern California housing market is finally slowing after most of the two-year pandemic boom has been backed by record low borrowing costs.
Now that mortgage rates are rising, home sales are declining, inventories are rising, and the outlook for home prices to fall is imminent.
June, Southern California Median home prices have fallen It is 1.3% from May, but usually increases over a two-month period.
According to real estate firm DQ News, the median was still up 10.5% compared to the previous year. This is a significant increase, but much smaller than the 16.7% seen recently in April.
So what does this mean to me?
Let’s start with the buyer. The main reason for the slowdown in housing is that mortgage rates have skyrocketed this year from the low 3% range to the middle of the current 5% range.
This has resulted in much higher monthly housing costs, reduced mortgage sizes available to borrowers, and some buyers have been fully priced from the market.
If you are a buyer, you will probably not be approved for what you probably had just a few months ago, and you may no longer be able to buy a house at all.
If you can still afford a home, there are some silver linings.
With fewer people shopping at home, the property remains in the market longer and offers buyers who have more choices.
In the four weeks leading up to July 10, real estate agent Redfin said nearly 19% more homes were for sale in Inland Empire than in the year-ago quarter.
In Los Angeles and Orange counties, Redfin data show that the number of lists is still below the level a year ago, but has steadily increased in recent months due to rising mortgage rates. increase.
This means that if you’re shopping, you’ll not only be able to choose more homes than you were a few months ago, but you’ll also have less fight to buy a home.
With a combination of fewer buyers and more inventory, bidding wars have become less common, so it may be easier to bid around the list price.
In fact, you No need to bid at a fixed price Jeez.
According to Redfin data, 29.6% of all homes on the market in the Los Angeles metropolitan area were cut in June. This is more than double the 12.6% rate in June 2021.
What else does the buyer need to know about the bidding process?
Over the past two years, many buyers have abandoned contingencies to highlight their offers from dozens of other offers submitted to the same home.
Some sellers didn’t mind the offer to hold certain contingencies. This is basically a good reason to cancel a transaction.
For example, contingency inspections can be canceled if the inspector finds a crack in the foundation or other unpleasant defects. In the pandemic market, you can leave if the appraisal is low due to unforeseen circumstances that are generally exempt.
Now, some agents say more sellers will entertain the offer in case of contingency. This is a shift that gives you the peace of mind that you haven’t bought lemons.
How about the seller?
Don’t expect your home to receive dozens of offers and sell for tens of thousands or even hundreds of thousands of dollars above the asking price. Your property may be on the market longer, especially if the price is too high.
As mentioned above, buyers can’t afford more than they were a few months ago, and many of your fellow sellers are forced to take that fact into account and lower their asking prices.
In this market you should pay more attention to choosing a good realtor. When a home usually pops out of the market in a few days, there is less agent has to do to sell the home.
Good agents can help sell in slow markets by suggesting a fair price for your home, staging with high quality furniture, and adopting other techniques such as video tours and 3D walkthroughs. increase.
For buyers, good agents can also help with strategies for getting a relatively affordable home. For example, you can target homes that are sluggish in the market and offer offers that are below the asking price.
What about the values of the house?
Some analysts say that overall home prices are unlikely to fall, but that the rate of increase in home prices will slow. That is, prices will continue to rise, but less than in the last two years.
To make this case, these analysts said that despite the recent increase in supply and declining demand, there is an overall shortage of housing and many people who still can and want to buy a home. Say you’re still there.
Other analysts predict: The value of the house goes down In 2023, however, few experts predict the decline as seen during the Great Recession.
This is mainly due to the significant reduction in the last time caused by the foreclosure. Lending standards are now much stricter, and experts say that many homeowners don’t want to sell at a lower price than their neighbors did a few months ago, unless forced.
Times staff writer Jack Fleming contributed to this report.
This story was originally Los Angeles Times..