EGBOK
Does anyone remember this saying? “Everything’s Gonna Be OK” was coined by the “Ken and Bob Company” morning radio program on KABC-AM Los Angeles, California (on the air from 1973–1990). I tell my kids this when they are stressed about something, and it applies to today in many ways as well. Sure, there are some scary things out there, but the world has been through worse. In terms of Real Estate, unless you over leveraged yourself with mortgage debt, EGBOK.
Inventory has started to pick up into the Spring selling season and buyers are actively in the market for homes. 2024 looks to be an improvement over the past year, but low inventory is likely to remain a theme over the next 6-12 months. While this makes things more challenging for buyers, it greatly improves the odds of selling your property for the maximum value on the most favorable terms. Nationally, home prices are expected to increase 3-5% in 2024; however, I anticipate we will see stronger growth in our market. In fact the median sales price in the South Bay has hit a new high of $1.314M (based on a12 month moving average). The South Bay is a luxury market. There is a large percentage of buyers that are relatively immune to higher mortgage rates, and when their investment portfolio is up 20% year-over-year, they feel fine splurging for a great property.
Speaking of interest rates, the Fed is maintaining a wait and see approach to interest rates so don’t hold your breath for a significant drop in mortgage rates anytime soon. The stock market has largely shrugged off the lack of rate drops as the S&P 500 and Nasdaq have hit all time highs. With high prices and mortgage rates remaining above 6%, buyers are left with limited options – grin and bear it or sit on the sidelines. A recent article in Barrons titled “It’s a Tough Housing Market. Home Buyers Shouldn’t Wait for It to Get Better” by Andrew Welsch suggests “if mortgage rates fall, home prices likely would rise, which means there would be little improvement in affordability.”
What Should You Do?
If you are confused about what to do remember this simple rule: Focus on quality and sustainability. Look for and keep high quality assets that have survived the tests of time. Invest in quality that you can afford and that can be counted on in both good times and in bad.
Market Rating: The overall market rating for March is an Improving Seller’s Market.
See you in the neighborhood,
Kyle
