Real Estate Update for December 2018
For many who thought we were headed into a home selling slump, the Real Estate update for December 2018 offers a refreshing, positive look into 2019. Finishing out the year, home prices in South Los Angeles and North Orange County showed resilience that will continue into 2019. Average home price increases year-over-year, however, were market. Many local Real Estate experts point to a continued tight market as homeowners stay in their homes longer, resulting in fewer homes for sale. Thus higher demand and continued upward pressure on pricing.
Home Buyers See Relief in 2019
There are indicators in this Real Estate update for December 2018 that tell us that after years of tightening inventory, there will finally be more homes for sale in 2019 (although the number of homes for sale will remain historically low). The hope is that this will be a trigger to more choice and a stabilization of prices for many frustrated home buyers. Certainly, the 4 interest rate hikes this past year helped move the real estate to a more fluid buyer and seller market. Our economy is on fire and inflation needs to be controlled. It is even palatable that the Fed implement one or two interest rate increases in 2019. How any change to the fed rate will affect the loan rate? In the past few weeks, the raise in interest rates by the fed had little effect on interest rates.
New, Pending and Closed Sales Slow in December 2018
Throughout south Los Angeles County and North Orange County, new listings for single family homes (SFR) are down by almost 10% and 4.7% for Townhouse-Condos for the month of December. Yet in both cases, the numbers for the full year of 2018 show a slight increase in new listings for both SFRs and Townhomes-Condos.
Pending sales show a marked slowdown. Homes in escrow during the month was down significantly for both SFRs (47%) and townhomes-condos (51.9%).
Closed sales also showed a softening in the marketplace with a decrease in closed SFRs and townhome-condos at -16.5% and -28.5% respectively.
Average Home Sale Prices on Par with the Past
Average home sale prices, when positioned against other indicators strengthens the position of those forecasting a shifting marketplace. Raising average sale prices of homes in the final month of 2018 show a marked increase year to date, but a lower mark year over year. Even with SFR average home price sales increasing 6.2% and sales of townhomes-condos at a pace of 7.5%, sellers initial listing price and sales price need to be adjusted downward by 3-5% in order to move into pending, then closed sale.
Days on Market and Inventory Supply Tell the Story
Days on market and inventory supply are two key factors prognosticators in the Real Estate Update for December 2018 that provide a window into where we may go 2019. Over the course of 2018, days on market showed that homes for sale were selling faster. However, December marked a change year-over-year. Homes are staying on the market longer (albeit slightly for SFRs). And there seems to be a split in homes that sell quickly and those that stay on the market longer. Based on my experience homes in Long Beach priced over $1,200,000 stick on the market longer. Sales of homes under $700,000 are selling as quickly as in the past few years.
Inventory of homes is increasing, not by a little, but by a lot. There are 30% more single family homes on the market year-over-year and 92+% more townhomes-condos. If this trend continues, more homes will be for sale and the pressure on price stabilization will be strong.
Outside the Real Estate Market
Unemployment rates remain remarkably low, wages continue to improve and chaos due to a government shutdown has weighed heavy on the psyche of many. It is generally good for real estate unemployment is low and wages grow. The dramatic rebound of home prices over the past 5 years however, has affected affordability. As affordability decreases and inventory increases, the inevitable correction will be in order.
The high demand for homes in Southern California, specifically Long Beach and the surrounding area, offset much of the noise surrounding a large portion the United States. I expect sales in 2019 will continue to be brisk with buyers gaining strength. Homes listed in the “sweet spot” will sell very quickly. And as more homes come on the market, buyers and sellers will be in a more equal position to negotiate. I anticipate there will be another strong year for Real Estate.
Dave Harbison has been a Real Estate Practitioner in Long Beach and surrounding communities. He regularly contributes to blogs, news outlets and other media. He continuously provides insight to home owners, buyers and sellers in the Long Beach and surrounding communities. Dave Harbison Long Beach REALTOR® firstname.lastname@example.org
DRE:#01475840 — Long Beach Realtor® / Real Estate Agent Long Beach Homes for Sale, Condos and Investment Properties