November 22 Market Update
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Holiday Market During the Holiday Market both the inventory and demand will plunge until ringing in a New Year. Southern California does not get pummeled by snow during the holidays like the rest of the country. There are no blizzards, school days are not cancelled due to snow, freezing temperatures are rare, and roads are drivable year-round not taking into account construction cones and the grind of holiday traffic. Regardless of the weather, housing slows with all the distractions of the yuletide season. The holidays are here and with it come holiday parties, plenty of shopping, family gatherings, eggnog, spirits, and nonstop festive music. With COVID being much less of a distraction and a deterrent to enjoying the essence of the season, sellers and buyers are going to be even more inclined to place their real estate needs on pause. The Holiday Market is when the inventory plunges, demand plunges, and the Expected Market Time increases slightly. Regardless of the economic situation, without fail the cyclical slowdown prevails. Last year the number of available homes was already at historically low levels all year. After peaking in July, a record low peak, it was hard to imagine the inventory could plunge at the end of the year. Yet, from mid-November to the start of the New Year, it sank by 39%. Demand, a snapshot of the number of new escrows over the prior month, dropped by 44%, and the Expected Market Time, the time between coming on the market and opening escrow, increased by a meager two days. Similarly, the 3-year average inventory holiday drop prior to COVID (2017 to 2019), when housing was a bit more normal, was a 20% decline. Demand dove by 44% and the Expected Market Time increased by an additional 19 days. |
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Luxury End
The luxury housing market cooled considerably in the past couple of weeks.
In the past couple of weeks, the luxury inventory of homes priced above $2 million decreased from 775 to 730 homes, down 45 homes, or 6%. Luxury demand decreased by 25 pending sales, down 19%, and now sits at 110, its lowest reading since May 2020, the initial lockdowns of COVID. With demand dropping significantly faster than the drop in supply, the overall Expected Market Time for luxury homes priced above $2 million increased from 172 to 199 days, its highest reading since June 2020. For perspective, it was 45 days in February, extremely hot compared to the sluggishness of luxury today.
Year over year, luxury demand is down by 111 pending sales or 50%, and the active luxury listing inventory is up by 308 homes or 73%. The Expected Market Time last year was 57 days, nearly instantaneous for luxury.
For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks increased from 137 to 144 days. For homes priced between $4 million and $8 million, the Expected Market Time increased from 365 to 527 days. For homes priced above $8 million, the Expected Market Time increased from 220 to 420 days. At 420 days, a seller would be looking at placing their home into escrow around January 2024.
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