The San Fernando Valley housing market is feeling the effects of supply and demand. Inventory is low, while the purchase market is being fed by historically low-interest rates and a pent up demand.
As was conveyed in my blog in the middle of July, the sales started leveling off in June after the mid-April to mid-June spike after the COVID related crash. The July “escrows opened” chart gives a great graphical view of the crash, spike, leveling sequence that transpired this year.
The minimal supply part of the equation is also reflected well in the “Inventory” chart.
The result of the supply/demand imbalance has been multiple offers for well-priced properties, and solid pricing appreciation.
The interesting statistic is the 36% “Back on the Market to Sales Ratio”. In other words approx. 1/3 of the opened escrows are not closing, and the properties are going back on the market as available inventory. That can be the result of buyers not qualifying for the loan, appraisal or inspection issues, etc. The negative COVID related employment/income elements, and the subsequent tighter lender underwriting can be an issue in some cases.
July single-family dwelling closed sales prices had a broad range. The average sales price was $1,060,200, while the median price (half the sales above and half below) was $800,000. That shows there is a high quantity of sales in the lower price range, but there are higher priced transactions that are pulling the “average price” higher.
The Federal Reserve already indicated they’re going to keep their Quantitative Easing in place, artificially keeping interest rates low, till we’re well out of the Pandemic. But they also indicated last week that they’re going to allow inflation to run hotter than the previous 2% target in the future. Allowing it to run hotter will probably signal higher interest rates once the economy stabilizes. Theatrically from today’s mortgage rates of 3% to the 5%+ range in a couple of years.
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me
Ron Henderson GRI, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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