As we enter the last month of the first half of 2023, it's time for another market update! We'll start with the big picture and zoom in a bit.
As always, we're going to look at supply and demand using data and commentary from HousingWire and Altos Research. The debt ceiling panic caused mortgage rights to jump over 7% again taking a toll on purchase application data - interestingly the last time that happened the average weekly decline in apps was -10%, over these last 3 weeks of rate increases, the cumulative decline was only -3.93%.
Inventory continues to be constrained due to an incredibly constrained rate of new listings hitting the market
Despite lower levels of new inventory compared to last year, the total number of homes on the market in the US has been quite a bit higher than it was at the same time last year, but current trends indicate we may actually end the year with negative year-over-year inventory growth. If that were the case, it would bode well for home price appreciation in 2024.
Locally here in Los Angeles, we had less homes for sale in our local MLS in May of 2023 than we did in May of 2022. That number has been pretty flat since the start of 2023, while it was steadily increasing over the same period the year prior. The number of new listings hitting the market each week is lower than we saw last year, but increasing steadily month over month. That month over month increase is not enough to increase the overall supply of homes because pending sales are also increasing - showing continued buyer demand here in LA. We are also seeing positive trends in average and median prices when looking at the entire MLS.
If we zoom in on home sales $5M and above, we see the impact of the new "Mansion Tax" or measure ULA which resulted in a huge increase in sales during the month of March before it took effect. In April and May we saw drop down to levels far below what we saw in 21 and 22, but more inline with "normal". And as you may have seen in the headlines, it didn't stop two big and high profile purchases! Beyonce & Jay-Z closed on the most expensive home in California history at $200,000,000, and Jennifer Lopez & Ben Affleck finally found the one (after several canceled escrows) in Beverly Hills Post Office for a bargain $60,000,000.
As we look neighborhood by neighborhood, we are seeing a softening of prices in some previously "white hot" micro-markets like the Pacific Palisades and Los Feliz, but it doesn't seem to be because there are no buyers... Anecdotally we are hearing that buyers are ready and willing, but also patient and savvy. So the great homes and the well priced homes, are still uber competitive and selling for top dollar.
