If you read my last post about the history of real estate in Northeast Los Angeles, you'll see that these numbers are unexpectedly positive. This bodes well for those thinking of selling their homes in neighborhoods like Eagle Rock, Highland Park and Mt. Washington.
Predictions in 2013 were that 2014 would see a rise in mortgage interest rates to 5% and that the market would level off. The fact that it didn't happen fueled a sense of urgency among buyers that rates could rise at any time so they'd better buy before it was too late. Coupled with the continued low number of homes available for sale, prices continued to rise. Don't be fooled by the increased days on market--as the $million-plus numbers grew, so did the numbers of sellers who believed that their homes qualified for, shall we say, aspirational asking prices. Consequently, 3 of the 7 homes currently listed for over $1 million have been on the market well over 200 days, and all but 1 over 50 days. Considering that the average days on the market of sold homes is under 50 days, you can see that these list prices are not achieving successful sales with these particular homes. But that's the topic of another post, so check back here if you're interested.
Another interesting fact is that while the average sales price rose, the number of sold homes went down. This would appear to be a result of decreasing affordability. It is likely also another effect of the continued low number of homes available for sale. Some experts say that another sign of a coming market correction is that we will see an increase in the number of listings that expire. Well, that hasn't happened yet.
At last, though, interest rates are possibly going to rise. Word is that the Fed (The Federal Reserve, which was created by the U.S. Congress in 1913 and is the formal organization for studying and implementing monetary policy), is going to raise the prime rate (the rate at which banks can lend each other money on a short-term basis) about 3 times this year. The prediction is that it will be in small increments of maybe .25%, and they did it once in December, which was the first time that rate had been increased since 2006.
What effect is this rising rate environment likely to have? Many Buyers would like to believe that this will cause a correction in the market, prices will go down--possibly even to maybe the lowest prices in the last decade. Dream on, Buyers. What is happening is that many other Buyers are out there looking for a good home to buy and the market is actually quite active. So far this year (that is 10 days at this writing) 5 properties have been posted as contingent or pending. There were 3 in all of December.
What do I conclude from this analysis? Well-priced, good homes are selling for prices higher than we've seen in the past. Inventory is still very low. Interest rates are still low. It's a great time to be a Seller of a good, well-priced home, and if you are a Buyer and you can find a home that you like and can afford, buy it. And, of course, we are here to help you accomplish those goals!