Spring Forecast: Expect A Little Bit of Everything
At least in the real estate market. There’s a lot going on, to put it mildly. It would be nice if every day was sunny and warm in April, but there will always be scattered clouds and showers…even in Los Angeles. The real estate market is somewhat analogous in that there is a mixed bag of opportunity and risk for buyers and sellers. The important thing, for both camps, is to focus on the long-term forecast and don’t get caught up in the moment, which can give birth to short-sighted decisions. Let’s consider a few statistics:
As for the economy, and its impact on the market, expect positive trends to continue: job growth is up and unemployment is down (almost back to pre-COVID-19 numbers). The downside is that inflation hit a 40-year high and will likely stay that way, at least for the foreseeable future. With gas prices climbing and a recession seemingly imminent, it is a time for caution, especially with buyers. The low housing inventory certainly puts sellers in the driver’s seat, but great opportunities are still available for buyers who do their homework. Interestingly, investors now account for 25% of home sales (the highest it’s been since 2014). Even more staggering, investor purchases are up 42% YOY in Q4 2021.
___________
Four-Quarter Price Change by State
Purchase-Only FHFA (Seasonally Adjusted, Nominal)
US Four Quarter Appreciation = 17.5% (2020 Q4 – 2021 Q4)
___________
Year-over-Year Payment Change
___________
Home Price Forecasts for 2022
KEY PROJECTION
Spring will be more of the same in terms of appreciation and rising rates. Buyers need not panic and make a hasty purchase, if possible. After the summer, a projected flattening seems probable—and with it, increasing opportunities as sellers begin to lose some leverage.
THE BOTTOM LINE
The nearly unanimous consensus is that home values will continue to rise over the next few months. So for buyers, there will be inevitable pressure to buy sooner rather than later. However, it may be wise to wait until July or August, as appreciation begins to level off, even plateauing by late summer. For sellers, now’s the time. The next three months should be the sweet spot before any leveling off sets in.
Be well,
Charles
___________
Market Data, Intel & Forecasts
01 Mortgage Rate Snapshot: The average 30-year fixed mortgage rate was 4.73% this week, up 14 basis points as rates continue to climb toward 5%. (Today’s Mortgage Rates)
Related Article: 5% Mortgage Rates? This Expert Predicts ‘It Could Happen Within the Month’ and Urges Borrowers to Compare Lenders. (Read: 6 min)
02 Resale Market Conditions: In Los Angeles, there is presently 1.1 months’ supply of home inventory, relative to 2.2 months’ supply a year ago. Total listings are down from 12,557 a year ago to 7,851 (-37% YOY). Days on Market (DOM) is down slightly from 43 DOM a year ago, to 38 DOM in March 2022 reflecting even higher demand. (Graphs & Data)
03 Existing Home Values & Forecasts: Los Angeles ended the year at 16.4% year-over-year growth, the highest we’ve seen since 2013 which experienced 17.4% growth. 2022 is forecasted to end the year strong at an 11.7% increase. Based on the data above, those thinking about selling are still in the driver’s seat, however, in the upcoming years, growth is forecasted to reflect below-average numbers with 2025 being “in the red” at -2.2%. (Graphs & Data)
3001 Benedict Canyon Dr
Beverly Hills P.O. | $13,400,000
u>VIRTUAL TOUR
___________
10800 Wilshire Blvd, Residence 1303
“The Wilshire Corridor”, Westwood | $3,975,000
VIRTUAL TOUR
___________
11455 Clover Ave
In Escrow after Five Days on Market | Representing Seller
Mar Vista | $2,100,000