Real Estate Market Update: March & April 2022

Out of Control

MANY MISTAKE THE SUMMER MARKET AS THE BUSIEST TIME OF THE YEAR FOR HOUSING, YET IT IS THE SPRING MARKET THAT IS HOME TO THE MOST REAL ESTATE ACTIVITY YEAR IN AND YEAR OUT.

An Insane Market

When the Expected Market Time drops below 40-days, the Seller’s Market shifts from “hot” to “insane,” and today it is at 30 days.

A three-bedroom, two-bathroom, 1,500 square foot home on a 10,000 square foot lot, built in 1972, was placed on the market on the first Wednesday of February at $999,000. There was a line going down the street to view the home during a three-hour window on Saturday and a three-hour window on Sunday. By Sunday evening there were more than 20 offers submitted to the listing agent. The seller countered to all offers and asked them to come back with their highest and best price. The home closed on during the first week of March at $1,200,000, an astonishing 20% above its list price.

Not every home sells 20% above its list price. The sales to list price ratio for detached homes so far in March is 104.7%. That means that the average closed sales price was only 4.7% over the asking price. An unbelievable 71.9% of all closed detached homes sold above their list price during the first few weeks of March. The median days on market is 8 days, just over a week. It would probably be even faster, but there are just too many offers to sift through.

The housing market is out of control as home values continue to soar. At this point, it is like a runaway freight train barreling down the tracks at an unimaginable speed. There really is no end in sight due to the catastrophically low inventory. With such a scarcity of homes available, there are far too many buyers for every home that hits the market. This imbalance can be seen in the sheer number of buyers bumping into each other, eager to view the latest new listing that hits the market.

It is extremely difficult to convey just how devastatingly low the inventory is right now. Today, for instance, there are only 5,481 homes available to purchase in all of Los Angeles County. There were 7,357 homes last year, still tragically low, but 34% more than today. The number one complaint last year was that there were not enough homes to purchase, illustrating just how dire the issue has become. The lowest level by far prior to COVID was achieved in 2013 at 8,007 homes, 46% more than the current level. The six-year average from 2014 to 2019 for this time of year was 11,337 homes, an additional 5,856, or 107% extra, more than double. The current inventory level is severely low and the main reason home values are skyrocketing.

LA County Example Pictured (Similar Throughout So Cal)

With such a limited supply of homes available to sell coupled with tremendous demand, the Expected Market Time (the time between hammering in the FOR-SALE sign and opening escrow) captures best just how insanely hot the Los Angeles County housing market is today. Anything below 90-days is considered a Seller’s Market. There are different levels of a Seller’s Market: slight, hot, and insane. A Slight Seller’s Market is between 60 and 90 days. Sellers get to call most of the shots, home values are slowly rising, and homes generate between one to two offers. An Expected Market Time between 40 and 60 days is considered a Hot Seller’s Market, where sellers get to call most of the shots, home values are rising, and there are a lot more multiple offer situations, especially in the lower price ranges. Anything below 40-days is an Insane Seller’s Market, and the lower the Expected Market Time, the more housing is out of control and unprecedented. This is when sellers get to call all of the shots, home values are surging, multiple offers are the norm, sales prices typically exceed their asking prices, and homes last only days on the market. At 30 days, the housing market is out of control at every price point.

Last year’s 33 day Expected Market Time was very similar to today’s ridiculous 30-day mark. In 2013, the Expected Market Time was at 42 days, the only year prior to COVID that nearly reached the white-hot level for housing, below 40-days. The six-year average from 2014 to 2019 for this time of year was 63 days, much different than the current insane pace. With patience, buyers were able to isolate a home within a reasonable amount of time and were not competing against so many buyers writing offers on the same home.

The simple economic principle of supply and demand does not adequately capture today’s dilemma. There just is nothing available for buyers to purchase right now. Anything that does hit the market is greeted with a deluge of showings and plenty of offers. There really is nothing spectacular about the number of buyers looking to purchase today. That is not the issue. The issue is that there are only 5,481 homes available today, in the middle of March, when there are typically around 11,300 (the six-year average between 2014 to 2019). Even with a similar number of buyers searching for a home today compared to past years, there are far fewer choices. This lack of FOR-SALE signs is precisely why the housing market is out of control.

As long as the inventory remains at catastrophically low levels, expect more of the same. 

LA County Example Pictured (Similar Throughout So Cal)

Active Listings Search

Living or Looking Outside of Southern CA?

We have partners everywhere, Let us know how we can help!

Not A Member Yet? Contact us for qualifying details.

Contact Me Directly

|*AgentFirstName*| |*AgentLastName*|

Email: |*AgentEmail*|

Mobile: |*AgentMobilePhone*|

Team Office: 424-260-VIEW

|*AgentLicenseNumber*|

 We Love Referrals! 

Click to REVIEW us—> How was your experience with our team?

Visit Our Website

If you have a brokerage relationship with another agency, this material is not intended as a solicitation. Information is reliable but not guaranteed and should not be considered legal or financial advice. Each Keller Williams office is independently owned and operated. Copyright (C) 2020 Keller Williams (R) Realty, Inc.