Just about a month ago, I was sharing with you in a newsletter that the market shifted, and buyers seemed to be backing off from buying, and property inventories in Southern California seemed to be building back up a little bit. Then came mid-October, and buyers came out again in droves, eager to take advantage of still low mortgage interest rates around 3.25% to purchase.
I personally worked with some buyers moving to Southern California for a job transfer, and they had to bid against 18 other buyers to get their dream house – a 4 bedroom 3 bath fully remodeled single story home, move in ready, for just over $900,000.
So, buyers were back in force in the month of October, and inventory took another nosedive down, and remains low now in the beginning of November. For example, in the city of Long Beach, the number of residential homes for sale currently is 261, while normal levels 2 to 3 years ago were over 500. We remain at about 50% of normal inventory levels of homes for sale.
Just yesterday, I was talking to another buyer who wanted to see a 2 bedroom 1 bath craftsman home in the Rose Park neighborhood of Long Beach. This house had been on the market for just 7 days, and was priced at $829,000. Hoping to arrange an appointment to see it today, the listing agent denied the request, because they just accepted an offer for above asking price.
So, we are back again with very lean inventory in the market, buyers bidding above asking price for houses, while the condo market continues to be brisk.
In the month of October, many people were moving. In our area of Southern California, many of my clients struggled to get moving trucks, movers, and moving companies to move their items into storage, or across the country to other states.
As remote working continues at many corporations, the idea of moving is still strong in people’s minds. And as many people approaching retirement age retire, many are seeking areas of lower tax rates and expenses to move to.
Also driving the movement of people may be the reports of inflation that are warning people of the potential increase in interest rates coming soon in the new year. While interest rates have remained low recently, they are also creeping up, and are expected to increase potentially a half a point by spring of next year.
Because the cost of borrowing affects not only buyers, but also sellers, in that if buyers’ borrowing capabilities go down, the price of homes may come down, we are seeing buyers buying at the end of this year, and also some sellers coming on the market to take advantage of strong prices in the area.
What buyers want: Houses super popular, and condos also going strong
Single family homes remain the darling in the market, and many individuals and families want house with more square footage, more rooms, more bathrooms, and good sized lots, preferably all on a single story.
Condos are also selling briskly in this market, though are more price and location sensitive.
Townhomes are popular with younger buyers who accept navigating stairs.
More and more buyers are demanding move in ready homes that don’t need any work, as the cost of remodeling and upgrading keep increasing.
The end of 2021 is approaching and it has been another very unique year. There has been a significant amount of real estate activity, with many people moving out of California, but at the same time, others moving into California, and many people moving from renting to owning their own home.
Common reasons for moving include job transfer, retirement, growing family, moving closer to family, and becoming more free to relocate due to being able to work remotely.
As we head into the holiday season, we expect those motivations for moving to persist, and real estate activity in Southern California to remain strong. If you know anyone with questions about their specific area or circumstance that my team and I can help with, please don’t hesitate to reach out! And please share with me your personal experiences and observations as well.