Man, the heat is ON and summer is in full effect. I am not sure why, but this year hit extra hard with a record-breaking 114-degree weekend and many more that were almost as bad. As a homeowner, I wince every time I hear my AC kick in. Sadly, it has become the white noise I fall asleep to. While I don’t want time to move faster, I eagerly look forward to late October with its cool air and stunning sunsets. Wow, I feel like I am writing a single’s advert. (Yes, I do like long walks on the beach, cookies, and serenading...)
Unfortunately, there isn’t a lot of heat in the real estate market. In fact, we hit a major slowdown in early June and things haven’t improved significantly since. We are seeing a little bit more activity which I attribute to people returning from vacation, but the headlines read pretty grim…
- “Housing is showing signs of cracking: Anything goes list price strategy no longer working.”
- “International buyers are dropping out of US housing market.”
- “Home sales declining in Southern California.”
- “New homes sales down 5.4% in June.”
- “Southern California home sales crash, a warning sign to the nation.”
These are just a few stories from late July. They are finally reporting what I mentioned in earlier client updates, namely that our best months are March through May and then a glut of supply comes on in early June, depressing the market. With home prices and interest rates rising, this effect was magnified.
In June, sales of Southern California homes and condos dropped 11.8% year over year. With that said, the sky isn’t falling and I believe we are just moving toward a more balanced market. The first fall in pricing was more abrupt because many sellers overpriced their homes in a declining market. Right now, it is NOT a seller’s market unless the home is an absolutely stunning, turnkey, or a highly upgraded pool home.
The rest of the year will be a good time for buyers to take advantage of more supply and flexibility before interest rates raise further. Sellers shouldn’t be too concerned at this point. Entry level homes in particular are moving pretty quickly. Our local market is very strong in general and there is nothing in the overall economy that raises major red flags. However, keep an eye on the trade war talk and interest rates.
Thank you very much for all the referrals and please do not hesitate to let me know if you know someone looking to purchase or sell in the area. We are glad to help and always appreciate your referrals!
Stefan West, aka Mr. Murrieta