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Review of all things Real Estate:Conflicting opinions

This week’s article is a conglomeration of comments and thoughts from several prominent real estate economists. It’s interesting that highly educated people don’t always agree, and in some cases, they appear to have conflicting opinions of the same data.

The comments from Lawrence Yun actually appear to conflict his own statements when he cites that “buyers recoiled in shock at the highest mortgage interest rates in a generation,” but then he reiterates that we are still experiencing multiple competing offers (we are witnessing that phenom locally but to a far lesser degree than we have seen in the past three years).

Yun also cites national data which is indicative of trends, but his numbers are way low regarding our local prices and value appreciation. To that point, in Fallbrook the median home price is $995,000 versus the $391,800 national average.

Additionally, our value appreciation is closer to 8% since October 2022 versus 3.4% nationally. Astonishingly, my son’s property has increased in value by 40% in 2 ½ years but, in fairness, he purchased it in Encinitas.

Data from the National Association of Realtors (NAR) indicates existing sales fell 4.1% in October to an annual rate of 3.79M, the lowest since 2010. Nonetheless multiple offers are still happening.

Existing-home sales bombed in October to a 13-year low as willing homebuyers recoiled in shock at record-high mortgage rates last month. Existing-home sales fell 4.1% in October to a seasonally adjusted annual rate of 3.79 million, the lowest month for sales since August 2010.

Sales were down 14.6% from a year earlier. “Prospective homebuyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” Yun said in a statement. “Multiple offers, however, are still occurring, especially on starter and mid-priced homes, even as price concessions are happening in the upper end of the market.”

The median existing home price for all housing types in October clocked in at $391,800, a 3.4% increase from October 2022 when it was $378,800.

Total housing inventory registered at the end of the month was 1.15 million units, up 1.8% from September but down 5.7% from one year ago. But while buyers continue to struggle, home sellers have benefited from limited inventory even as mortgage rates continue to hover near 8%.

“While circumstances for buyers remain tight, home sellers have done well as prices continue to rise year over year, including a new all-time high for the month of October,” Yun said. “A typical homeowner has accumulated more than $100,000 in housing wealth over the past three years.”

Properties typically remained on the market for 23 days in October, up from 21 days in September. Per NAR data, a whopping 66% of homes sold in October were on the market for less than a month.

First-time buyers were responsible for 28% of sales in October, up from 27% in September and identical to October 2022 levels. Individual investors or second-home buyers made up 15% of home sales in October, down from 18% in September and 16% one year ago.

Some experts suggested that the combination of existing inventory bottoming out and new listings steadily returning to the market could result in an upward trend for home sales in 2024.

“Recent CoreLogic transaction data suggests that existing-home sales are leveling off despite the recent surge in rates,” CoreLogic Chief Economist Selma Hepp said in a statement. “At the same time, existing inventory also appears to have reached the bottom and new listings are keeping steady despite the usual seasonal decline.”

“Together, the two may suggest that there really is nowhere to go but up in 2024,” Hepp added. “In addition to existing-home sales, and with expected decline in interest rates, homebuilders will have more homes ready for purchase, which, working together, could drive overall home sales higher next year after a lackluster 2023.”

That’s a pretty optimistic statement that overall sales could increase in 2024. We still have supply chain issues, persistent inflation, transportation choke points, higher cost of labor and the threat of recession. But as stated in the introductory paragraph, different people interpret the same data points differently so we’ll just have to wait to see how it all plays out in 2024.

 

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