Is it IT IS time to sell your home!
Reviewing the early stats for 2022 in various different areas of LA that I specialize in, as well as the entire MLS data for Los Angeles, the numbers I'm seeing are truly unbelievable. It's no wonder, at all, that properties are selling in a matter of days and, in some cases, minutes when you take a look at the statistics I'm presenting. Of course, well over asking and, in many cases, shockingly so.
How much is my home worth?
The long and the short of it as far as making an inquiry like "how much is my home worth?" or "what's the value of my home?", is that the simple answer is much more than ever before! Where we stand right now at the beginning of 2022, still, it's simply not possible to get an accurate home value from any of the automated/statistical valuation models, like Zillow, Redfin, etc. Selling your property to an iBuyer like Opendoor, Offerpad and others, would likely also be a huge and costly mistake. The best and only way to determine the value or price range your home or property would achieve on the open market is to have a licensed professional evaluate your home. A Realtor®; A professional "marketer". They are the only ones that have any idea how to deal with what's occurring in the market right now and the only way to ensure that your best interests are well-served. Ultimately, the only way to get market price is to actually "market" the property. Never has there been a better time to do just that.
Here's what's going on:
Specifically with Los Angeles area real estate, there are fewer properties currently on the market than we've seen in over a decade and probably well over a decade. We are facing a severe shortage of available inventory of homes for sale, locally, RIGHT NOW. In fact, stating that there are "fewer properties currently on the market" is a gross understatement. I'll share the numbers and data with you shortly.
Combine the severely low inventory of available homes with the news that rates will be increasing this year and home buyers are lining up in droves to bid on whatever they can possibly bid on completely driven by FOMO (the fear of missing out on low interest rates). The word from the U.S. Federal Reserve is that there will be a rate increase in March and possibly as many as four rate increases this year. When they increase rate in March, they will provide further guidance, but some early word is that "the Federal Funds rate should be increased to where it was just before the pandemic."(1) It deserves mention that the 10 Yr U.S. Treasury note yield is already at the same level (rate range) that it was immediately preceding the pandemic.
The prospect of higher rates, including mortgage rates, beginning to become more and more real is not the only factor stoking the extremely high demand we're seeing from buyers in the market. The rate at which rents are currently increasing with many tenants seeing the biggest increase in twenty years(2) is a major deciding factor for many renters taking the leap into the market to try to achieve homeownership.
The residential real estate market, both locally and across the entire country, is incredibly out of balance from the perspective of "supply and demand". This means if you have a home to sell, now is the time to do it. Like probably never before, now is the time.
As far as the anemic supply of homes currently available and listed for sale throughout the country but, in particular, the entire greater Los Angeles area, I've put together the following information using the local MLS. (3). We've been talking about an anemic supply of homes for sale for quite a long time. In fact, several of the past years shown in the charts below were low supply years to begin with. What we are dealing with right now and as of today has reached the point of absurdity.
Here's a couple of charts -
Charts Sourced From Combined LA/Westside Multiple Listing Service, Inc (MLS) (3)
You can see in the first chart that the entire local MLS has a total of 18,645 homes listed as of today (February 3, 2022). That's it! The entire MLS right now. Last February, there were 29,717 single family homes for sale. That represents over a 37% haircut in available inventory year over year and last February was already extremely low inventory levels, historically speaking. As far as historical numbers are concerned, you can see that 2020 and 2021 saw lower inventory of homes listed than any of the prior 4 years going back to January of 2016. Folks, we were already talking about "low inventory" in '16, '17, ' 18, and '19! The problem we're seeing today, if you look at the charts, seems to have started to develop in September or October of 2019 and has progressively gotten worse.
If a "normal" February sees about 40,000 to 50,000 homes on the market, locally, to meet far lesser historical demand, we can see right here in these graphs why homes are now selling for $100,000, $200,000, $300,000 or more over list price. With demand 'through the roof', the current inventory of listed homes isn't anywhere near enough to balance the market. Not even close! I'd actually say that we probably need about 3 or maybe even 4 times the number of homes to be listed than are actually currently listed for sale in order to come anywhere even close to balance.
Should you have a property to sell... (You're in a great position!)
Like with any market, as we learned in economics 101, the principal of supply and demand is the factor that equates to what we are seeing and experiencing right now in the local real estate market. I've drilled down these numbers for myself in some of the local areas that I specialize in like Studio City, Sherman Oaks, Valley Village, Toluca Lake, Burbank, Reseda, Most of the San Fernando Valley and the hillside into the West-side neighborhoods of Bel Air, Beverly Hills and West Hollywood. I'd be happy to share details with you if you'd like to discuss and be educated on what's happening right now with the real estate market in your particular neighborhood or even street!
The situation that we have right now is likely going to take some time to balance out. On the one hand, it's absolutely brutal for would-be homebuyers; On the other it's a phenomenal environment for anyone selling a property. While there's still great mortgage rates to be had, good luck finding a home and getting under contract to buy it. The perfect storm that's been created here is clearly the best time we've ever seen to take a home to market. It may, actually, be the best time for selling a home that we ever will see. (Disclaimer - My crystal ball is out for repairs)
I sell homes all over Los Angeles and I have over 20 years of in-depth industry experience. I'm also a solutionist! As such, I know that one new listing isn't going to solve the overall supply and demand problem that we are currently facing in the market, but I'm 100% confident we can come up with some great solutions and RESULTS for you!
Ken Sisson, Associate Broker/Realtor® DRE license 01292247
Keywords and Phrases and Citations below -
High-demand and low inventory contribute to the answer to your questions "What's the value of my home in Studio City", "What's the value of my home in Sherman Oaks" and "What's the value of my home in Toluca Lake". If you find yourself saying "Looking for a Real Estate Agent in Studio City", "Looking for a Real Estate Agent in Sherman Oaks" or "Looking for a Real Estate Agent in Toluca Lake", Ken can help you!
1 Fed's Barkin says rates should move to pre-pandemic levels, then assess next steps | Reuters https://www.reuters.com/business/feds-barkin-says-rates-should-move-pre-pandemic-levels-then-assess-next-steps-2022-02-03/
2 Rents are rising 'ominously' fast as tenants see biggest increase in 20 years | MarketWatch https://www.marketwatch.com/amp/story/rents-are-rising-ominously-fast-according-to-some-economists-11634144455
3 Combined LA/Westside Multiple Listing Service, Inc https://www.themls.com/