As we close out 2018, we’re shifting into a more normal market, which is good news for buyers.
As we near the end of 2018, what’s the status of our Southern California market?
The reality is that we’re at the end of an eight-year, upward-trending cycle. What happens at the end of every cycle like this is a bit of a market decline, and we’re beginning to see the start of this. The seasonality of the market is also causing things to slow down a bit. By no means do we think we’re headed for another crash like what we saw in 2008, though, so there’s no need to worry about that. Market conditions are completely different from the ones that preceded the 2008 crash.
Here are some of the latest stats from our entire MLS that illustrate the change taking place:
- Our average original list-to-sale price ratio is 97%.
- Our average sale price peaked back in May at $771,000, but now it’s dropped 5% to $733,000.
- At the end of 2017, there were 46,631 homes on the market, and last month there were 63,596.
- During December 2017, there were 14,215 pending sales, but last month there were only 12,686 pending sales—a 28% drop.
- There were 19,058 closed sales during December 2017, but only 17,253 last month, which is an 11% decrease.
- Our average days on the market have increased year over year from 23 days to 43 days.
- Our year-over-year average list-to-sale price ratio has stayed roughly the same: 99%.
The real takeaway from these stats is that if your home isn’t priced correctly, it won’t attract many showings or offers. In general, they also indicate that we’re moving into a more normal market. Inventory is growing, which means buyers have more choices, and whenever this happens, prices naturally either flatten or decline.
In a situation like this, sellers will price their homes competitively or offer incentives in order to get their homes sold. New builders are also more apt to offer competitive rates and more incentives. Normal homes are also more likely to stay on the market longer under these circumstances, which is why it’s all the more important to price your home correctly and work with a great real estate agent.
In a normal market, there’s less profit appreciation. We’ve been very lucky in the Southern California region in that we’ve seen double-digit appreciation over the past decade, but that’s slowed down to a rate of 3% to 5%. Interest rates have risen over the past year, and that’s something that’s affected both buyers and sellers.
Lastly, it’s important to note that although we’re shifting into a more normal market, we’re still not quite a buyer’s market yet.
If you have any more questions about our market or you’re thinking of buying or selling a home soon, feel free to call or email me. I’d be happy to help you.