June Gloom?! Not in Real Estate

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It’s more of the same this month in residential real estate: low inventory, bidding wars, quick sales and, of course, rising prices. According to a May 7 article in Mansion Global, the nationwide median home price rose 21% year-over-year to a record $348,500. Days on market averaged only 19, down from 35 a year ago. And astonishingly, 48% of homes sold were at prices over list, a record high and 20% higher than a year ago.

In the Los Angeles market, home prices were up nearly 23% compared to last year, selling for a median price of $920K (May 2021 figures). On average, homes in Los Angeles sell after 37 days on the market compared to 49 days last year. There were 2,737 homes sold in May, up from 1,087 in May of last year (although Covid-19 clearly affected 2020 sales figures).

Insiders are hopeful that the rapid run-up in home prices will start to taper (possibly due in part to rising mortgage rates), which could bring more inventory to market as sellers no longer fear being priced out of their next home.

Speaking of mortgage rates, all eyes are on the Fed. The Fed indicated last Wednesday that it could hike rates sooner than the market anticipated due to inflation (including in housing) running a bit hotter than they’d like to see. Rising rates coupled with continued high lending standards would likely reduce the pool of buyers able to purchase homes at current values and should help to stabilize prices.

In the meantime, sellers continue to enjoy the upper hand. As always, if you’re a buyer, have your pre-approval letter in hand and expect some competition for the home of your dreams.

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