Update On Real Estate Market June 2022 | California Dream

Update On Real Estate Market June 2022 | California Dream

Thinking about buying in Santa Monica or Malibu, California.
Did You Know?

June, 2022
New price opportunity in Santa Monica! COMPASS agents Cindy Ambuehl and Don Heller relaunched 401 Ocean Avenue Unit 3 & Unit 4 this week with a $2.5M+ price improvement. Now offering on-demand concierge services, 401 Ocean's final 22 units offer the opportunity to experience the finest in beachside living while holding an address steeped in California history.
* The median price for a home in Malibu, CA has more than DOUBLED since 2019. (WSJ)
* When interest rates rise, some people will simply not be able to afford to buy many homes at their current prices. When a seller considers a price reduction to help 'match' the monthly mortgage payments of lower rates, this is how to adjust:  
- A 6% mortgage rate monthly payment is equal to a mortgage payment with a 5% rate when the asking price is reduced by roughly 8.25%.  
- A 6% mortgage rate monthly payment is equal to a mortgage payment with a 4% rate when the asking price is reduced by roughly 16.25%.
* Many buyers who for the past months approached a listing almost certain they would have to bid over the asking price, may now not encounter as much competition (and/or a seller/agent with a less aggressive asking price)......combined, these two factors may offset what might have been a higher selling price to offset higher borrowing costs.  Remember, if a home price has risen 20% in the past year, a 10% price reduction erodes 12% of that 20% gain.
* Some corporations may need to spend more servicing their debt as rates rise: A 1% increase in rates on a $100 million debt is an additional $83,000-plus monthly cost. A billion dollars in debt costs $833k more per month for every percentage point increase.
* Construction started on new U.S. homes fell 14.4% in May,  (Commerce Department). The annual rate of total housing starts fell to 1.55 million last month from a revised 1.81 million in April. The drop is the biggest decline since April 2021. Housing starts are now at the lowest level since April 2020. The construction pace for single-family homes fell 9.2% in May, while apartment starts fell 26.8%......not sure if cutting supply will help inflation.....but it could keep prices high. (MARKETWATCH)
* US home-builder Lennar home sales revenues increase 33% to $8 billion, primarily due to a 14% increase in the number of home deliveries ...and a 17% increase in the average sales price.....when inflation is allegedly under 10%? Why? It's a free market. Regardless of higher costs, free markets price where the demand is. Lennar expects sales to slow in the next 6 months due to sharply higher interest rates.....exactly what the Fed's goal is.
* While Goldman Sachs raised the likelihood of a recession to 30%, the other side of that is ....they assume a 70% likelihood of no recession..... I'm so confused!  Goldman's best guess is that both wage growth and inflation will quickly fall in a recession, and that the Fed would respond accordingly ......by cutting rates. (BARRONS)
* Silverstein and Metro Loft have purchased a 33% empty office building in the Financial District planning to convert it into apartments, one of the largest conversion schemes to be launched during the pandemic. The price? $180 million for the 30-story building that opened in 1967 that has housed tech and financial-services tenants. The plan is to convert it into 571 market-rate apartments, from studios to 3-bedrooms, over 3-4 years. (BLOOMBERG)
* US single-family rents jumped 14% YOY in April, the 13th period of record-breaking annual gains. Supply shortages and a strong job market are driving prices and its possible single-family rent growth could continue to increase at a rapid pace throughout 2022 as higher interest rates compel many to rent instead of buy. Miami posted the biggest gain -- almost 41% - about 7X the growth rate of 5.6% back in April 2021. New York City, Philadelphia, and D.C., posted some of the smallest increases. (Corelogic) 
* The best leading indicator for markets is....sentiment. Confidence in making a major purchase remained steady at 19.2, finding a new job fell 0.2 points to 48.1, and personal finances fell 1.3 points to 50.8. All are notably down from 2021. Expect many politicians to drive sentiment (accurately and inaccurately) for the next several months - both ways - as we approach midterm elections in November. The next few months will be NOISY! (ESI)
* Sales of existing homes in May fell 3.4% to a seasonally adjusted annualized rate of 5.41 million units, the weakest reading since June 2020, which was during the early months of the pandemic. Adjusting for that, it is the lowest since January 2020.....which was a notably improving market after a weakish 2019...  Home-buying demand continues to exceed supply, buoying home prices to new highs. The median existing-home price rose 14.8% in May from a year earlier to $407,600, a record high in data going back to 1999. Nationally, there were 1.16 million homes for sale or under contract at the end of May, up 12.6% from April and down 4.1% from May 2021. (CNBC)
Source: Compass
Are you looking to sell your home? Or searching for your next home? I would love to make your real estate dreams come true. It's a tremendous pleasure helping someone buy or sell their home - that's why I make sure my clients' needs come first. I have a proven system that ensures sellers' homes stand out on the market. 
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It's a tremendous pleasure helping someone buy or sell their home—that's why I make sure my clients' needs come first. I have a proven system that ensures sellers' homes stand out on the market.

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