Is the Real Estate Market Slowing Down?
We are reviewing the real estate market on a national, state and county level as well as diving into the market for the beautiful Los Angeles suburb of Manhattan Beach for May and June 2021!
For the week ending June 19th, 2021 stock markets dropped following comments by the Federal Reserve after their monetary policy meeting last week. The Fed recognized that inflation is picking up at a faster rate than they expected and they said they anticipate bringing rates above the 0% rate they dropped them to during the pandemic by making two rate hikes in 2023. Although, the Fed is not committing to rate hikes until 2023, they may take other tightening measures to keep the economy from overheating including reducing bond purchases as well as some other actions to tighten the money supply.
The 30-year fixed mortgage rate was 3.02%, up from 2.93% last week. The 15-year fixed was 2.34%, up from 2.24% last week. The 5-year ARM was 2.53%, unchanged from 2.52% last week.
We expect interest rates to remain low but they will start to slowly rise and we expect to end the month of June around 3.28% or less. We are so used to low interest rates that people think a 3.25% interest rate isn’t great, but check out this graph of mortgage rates over the decades.
We are extremely lucky to be able to buy a home at such a low rate. If you are in a position to buy, take advantage of these rates because the low rates increases your purchasing power so much! This graph really puts that into perspective. We used a nice round number of $1M, but multiply or divide to get to your desired result. At 2.75%, your payment on a $1M purchase will be the same as a $900K purchase at 3.75%. With homes appreciating and interest rates rising, take advantage of this opportunity. As you can see on this graph, a difference of $240.17 over the life of the loan adds up to $86,461.20, which is a huge chunk of change. If you need help creating a game plan, click on our calendly link below to set up a buyer’s consultation so we can get you started on the path to homeownership.
Southern California Real Estate Market Update
Southern California home prices increased 24.7% year-over -year in May. May existing home sales in their six county Southern California region Jumped over 100% from the number of sales last May. That surge is mostly related to a near stoppage in sales last May at the start of the pandemic. The median price jumped 24.7% in the six county region.That marked the highest year-over-year increase in the median price EVER! The county by county numbers were as follows: Los Angeles County recorded a 25% increase in the median price. Orange County recorded a 19.3% increase in the median price. San Bernardino County recorded a 16.8% increase in the median price. Riverside County recorded a 22.5% increase in the median price. Ventura County recorded a 20.9% increase in the median price. San Diego County recorded a 22.9% increase in the median price.
National Real Estate Market Update
May U.S. home sales – The National Association of Realtors reported that existing-home sales jumped 44.6% from the number of homes sold last May. The median price paid for a home in May was $350,300, up 23.6% from last May’s median price of $283,500. May marked the 111th straight months of year-over-year increases in the median price.The unsold inventory level is at a 2.5-month supply, down from a 4.6-month supply one year ago. First time buyers accounted for 31% of all purchases. Second-home and investor purchases accounted for 17%of all homes sold. Foreclosures and short sales accounted for less than 1% of all homes sold.All cash purchases accounted for 23% of all transactions.
California Real Estate Market Update
California home prices reached a new all-time high again in May – The California Association of Realtors reported that existing home sales totaled 445,680 on a seasonally adjusted annualized rate in May. That marked a month-over-month decrease of 2.7% from the near record number of homes sold in April. Year-over-year the number of sales were up 86.7% from last May when home sales ground to a halt due to the pandemic. The median price paid for an existing home in May was $818,260, up from April’s $813,980 median price. Year-over-year the median price increased 39.1% from last May when the median price was $588,070. May marked the highest year-over year gain in prices ever recorded, and the second straight month of year-over-year gains of over 30% in the median price, also a record. The California Association of Realtors tracks inventory levels based on how many months it would take to sell the active listings in all MLS systems at the current sales level. There was a 1.8 month supply of homes for sale in May, up from 1.6 months in April. There was a 3.2 month supply of homes for sale last May. The average 30-year fixed mortgage rate in May was 2.96%, down from 3.16% in May 2020.
Manhattan Beach Real Estate Market Update
Now let’s talk Manhattan Beach! In May there were 52 sales in Manhattan Beach up from 20 sales this time last year when we were in the thick of the pandemic. There were 52 new listings in May. The average days on market was 31 days for the city of Manhattan Beach down from 38 this time last year. The Median sales price was $2.765M up 7.93% from last year from $2.562M. The list to sales price ratio was 100.1%, which means on average homes were receiving their listed price. In the under $2.5M range it is more competitive and we are seeing multiple offers so if that’s your budget make sure to look slightly below budget so you make sure you can remain competitive. Inventory is still very low. We are slightly above a 1-month supply in Manhattan Beach and a 4-month supply is average so that is why we are seeing multiple offers and homes selling over the listed price in many cases.
Manhattan Beach 2021 Predictions
While the market isn’t as red hot as it has been the first part of the years, the slow down is not significant. 2021 predictions are that:
- Prices in Manhattan Beach are predicted to continue to rise at least 8% in the next year. Demand is high and interest rates and supply are low so that is the reason for this.
- Inventory: Inventory is down almost 50% year over year, but we expect it to slowly increase as people feel more comfortable post-pandemic.
- Rates: We are seeing rates slowly rise and that is to be expected as we continue to recover from the pandemic.
People always ask me if this is a good time to buy and throughout my career, I’ve never heard anybody say they wished they waited longer to buy their house just that they wish they would have purchased sooner. With appreciation and interest rates rising, now is the time to lock in a low interest rate and watch your property value increase!
If you would like more information on the buying and selling process or real estate market you can call/text me at 424.333.5340 or e-mail me at AshleyNovak@RodeoRE.com. I would love to help you with your next real estate transaction!