Greetings!
I hope you enjoyed a wonderful holiday season. The new year offers the perfect opportunity to step back, re-analyze our goals, and create a feeling of a refreshing new beginning. Personally, I can't think of another year where a reset has been more welcome. Of course, it would be naive to believe all of the troubles we experienced last year will magically disappear overnight. However, with promising news of the vaccine rolling out, for the first time in many months there appears to be a light at the end of the tunnel.
As we enter into 2021, we continue to experience very low housing supply coupled with an extremely strong buyer demand. This lack of inventory has prompted home prices to rise. Though much of this increase has been offset as mortgage rates continue to reach an all-time record low. Take a look at the graph below to view the average Months of Inventory (MOI) in the Greater Los Angeles area. MOI is calculated by dividing the number of properties for sale by the number of properties sold over a given month. An MOI lower than 3 is an indicator of a Seller's Market, meaning there is a higher demand for properties than there is inventory.
The market in Los Angeles County briefly flipped over to a Buyer's Market after shutdowns in the spring (see the peak in the graph below), though this quickly bounced back to a Seller's Market as stay-at-home orders were relaxed in early summer; buyers were once again able to jump into the market, leading to abnormally high sales volumes throughout Q3 and Q4. This trend also suggests that many homebuyers opted to delay their purchases rather than cancel them altogether. These observations as well as others around us lead us to predict that (1) we are headed for an increasingly busy 2021 as things open back up again, and (2) an increasingly growing number of millennial buyersare entering the housing market. Click on the name of your neighborhood to the right of the chart for specific statistics in your area, then give me a call or email me back so we can discuss what these numbers mean for you.
Data for your neighborhood:
Beverly Hills — El Segundo — Hawthorne — Hermosa Beach — Lomita — Long Beach — Manhattan Beach
Marina Del Rey — Palos Verdes Estates — Playa Del Rey — Playa Vista — Rancho Palos Verdes
Redondo Beach — Rolling Hills Estates — San Pedro — Torrance — Westchester
Despite the ups and downs last year brought with it, the Southern California real estate market has proven itself to be incredibly resilient. With homes moving so quickly, now is a great time to buy, sell, or start getting ready for the spring selling season. I would love to hear what your goals are for this year and to help you create a plan to put those goals into action! Above all, I hope this new year greets you with a renewed optimism of what lies beyond the horizon.
Wishing you a happy and healthy start to 2021,
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Months of Inventory based on Closed Sales (MOI based on Closed Sales)
MOI based on Closed Sales = the number of properties for sale divided by the number of properties sold.
Calculated by dividing the number of homes that closed sale in a given calendar month, into the number of homes that were active at the end of a given calendar month. Typically expressed as “If no other homes were listed as of the end of that month, and the current pace of sales prevailed, it would take X number of months to sell through the current inventory.”
Months of Inventory
<3 = seller’s market
3-6 = neutral market
>6 = buyer’s market
All reports presented are based on data supplied by the CARETS. trendgraphix.com
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