CA Association of Realtors has released the January 2023 Housing Market Statistics. Keep in mind most of these sales went into contract in December with a 30 day escrow.
In the Los Angeles County housing market statistics the median price fell in January from December (2.6%) and also is down from same time last year (2.8%) according to the CA Association of Realtors. While some news media is talking about “plummeting prices” or “plunging prices” I don’t think this is accurate with the difference in median price under 3%. Unfortunately consumer decisions are impacted by these headlines.
Prices peaked in May 2022 during the period of artifically low interest rates. Current prices are clearly impacted by the normalizing of mortgage rates. However I also believe that the fact that many of the properties now being listed are necessary sales such as Probate and Trust Sales which often have deferred maintenance and so carry a lower price. Historically families would regularly hold on to these properties, often as rentals, due to the low property tax basis. Post Proposition 19 after the Owner dies the property tax basis resets to current reassessed value unless a family member resides in the house as their primary residence, removing the incentive to keep the property. The comparatively higher percentage of these and other non-discretionary type sales (relocating, divorce,…) impact the median price statistic too. If the mix of properties being sold is different then it isn’t a true apples to apples comparison.
Another important consideration, that is especially true in Los Angeles county, is that according to CoreLogic:
“Most homeowners are well positioned to weather a shallow recession. More than a decade of home price increases has given homeowners record amounts of equity, which protects them from foreclosure should they fall behind on their mortgage payments.” -Molly Boesel – Principal Economist for CoreLogic
Furthermore according to CoreLogic “In November 2022, 2.9% of mortgages were delinquent by at least 30 days or more including those in foreclosure. This represents a 0.7 percentage point decrease in the overall delinquency rate compared with November 2021”. While these are national figures there is no indication that Los Angeles County has a higher rate of delinquency than the national rate which has decreased.
In the 2008 downturn a key factor was recent buyers that had made low down payments didn’t have enough skin in the game and were more willing to walk away. Now recent buyers who may feel they overpaid a little on their purchase price are still in a solid position with their relatively lower current monthly payment based on their near 3% loan.
For now it feels that activity is picking up from both owner occupant and investor buyers which is a good sign. It will be very interesting to see what happens between now and March 12 when we switch to Daylight savings time.
I still feel strongly that if first time home buyers or Buyers with a lower down payment (such as FHA or VA loans) who want to get into the real estate market should start looking at both properties and loans now. FHA just lowered their Mortgage Insurance Premium as an incentive.
If you want to buy real estate in the 2023 now is the time to learn about what type of loan you can qualify for and want to use for your purchase.
Who to Call
For a free consultation on your home’s value, how to prepare your home to sell or the real estate market in general call me at (818)570-1144 or email [email protected] or visit https://janeybishop.com
SRES, CPE, CPRES, RCSD, CDRE
Senior Real Estate Specialist, Certified Divorce Real Estate Expert Certified Probate Expert
Certified Probate Real Estate Expert, Real Estate Collaborative Specialist – Divorce
