What's Happening With the Real Estate Market?

real estate market update June 2022

What’s Happening to the Real Estate Market

With the economy slowing down, inflation, stocked market plunges, crypto crash, gas prices, decade high interest rates and all these things… what is happening with the real estate market? 

The chart above represents the inventory levels of the Real Estate market at that specific date. As you can see in 1 month and 10 days the market has seen a 50.7% increase in active listings. A significant surge of properties hitting the market. In order to gauge buyer demand, we can look at the amount of homes entering escrow. This shows that buyers are pursuing and getting offers accepted to purchase. Even with the surge of listings hitting the market, it would typically make sense to see more homes enter escrow, but we are seeing the complete opposite. A 38.5% decrease in pending homes, showing signs that buyer demand is quickly dwindling. Average Days on market has also increased which indicates its taking longer to sell and potentially sellers will have to reduce their prices in order to sell. As we look at a more targeted market like Torrance, a pretty hot South Bay market, we look into how the Real Estate market is affected by the economic events. 

In the Torrance market, it is a little different from the overall South Bay Market. First thing we notice is that the inventory has surged 69% in just a month and ten days. Along with pending homes that indicate buyer demand, it is somewhat stronger than in other markets since we do not see a severe reduction like the overall market. 

In a market like Torrance, there will be strong demand, but at the same time with the increased interest rates, homes will take longer to sell and sellers will have to be more realistic with pricing. Average days on market have significantly increased in the last month increasing to 28 days, 10 more days than the previous month. 

What can we expect in the next few months. With the current trends, we can see more inventory hitting the market. Price drops and the market soften up. We haven’t fully gone into a buyers market, but we may reach it sooner than later. We are no longer in a strong seller’s market. With interest rates continuing to go up, prices will reflect those rates and soon go down. We don’t know how much they will drop, but a correction will ensue.

Interest Rates

Currently interest rates are sitting at 6.07%. Rates continue to go up and there is another scheduled increase coming in the next month or two. May 1st, it was at 5.5%. On April 1st it was 4.9% just for perspective. The FED has forecasted that multiple rate hikes will be present this year. Something to look out for in June and July where we may see a couple half point rate increases. 

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