So said Sgt. Joe Friday, Jack Webb’s character in Dragnet.
For this edition, I won’t include outside charts or projections, just the facts I have been keeping track of.
Let’s begin with the statistical tables.
In the Conejo, inventory continues to grow, up 31% from a year ago, and has become less of a factor in the balance of supply and demand. Prices are elevated due to prior lack of inventory, and are now settling down to a reasonable 5% for Median prices. Average prices continue to outpace the Median due to activity concentrated in the highest tranche of home prices, those above $1.5 million. Time-on-market has been growing and is now a little over a month. The number of sales versus last year is up 4%, but last year saw sales dip due to mortgage rate increases. The combination of increased sales and price increases has caused the total dollar value of sold properties to increase by 12% versus last year. As inventory grows and the number of sales remain low, Months Of Inventory (Inventory/Sales) has risen to two months supply. For Conejo, that indicates a balancing market. Sales remain heavily weighted toward the highest price homes, with those sales numbers rising 28% compared to last year. However, inventory is also growing in this highest price category. Homes priced above $1.5 million now represent 42% of all homes active on the market. Sales activity in these homes is less affected by mortgage rates than lower priced homes, as many are bought with all-cash or using short term mortgages. These homes currently represented 25% of all sales in Conejo.
Simi Valley/Moorpark homes are not heavily weighted in the highest price category, so the results are a little different. Due to low inventory in the past few years, Simi Valley/Moorpark inventory is up a substantial 55%. Prices, both Median and Average, are up 4% versus last year. Sales numbers compared to last year are up 2%. The combination of price increases and increased sales has seen the total dollar value of solds rise by 5%. Supply and Demand is balancing, and inventory is approaching 2 months-worth of sales. The highest tranche of prices does show a large percentage increase in sales, but the actual numbers are very small, as higher priced homes only represent 7% of all sales in Simi/Moorpark.
Inventory has grown in both valleys. The Conejo graph is proceeding normally as we head toward the end of the year. For reference, Covid hit in April 2020. Everyone expected real estate to flatline as we locked ourselves in our houses, and listing were taken off the market. But having a larger home in which to work and moving to the suburbs due to the ability to work from home created a market frenzy. Low inventory was due both to an increase in purchases and hesitancy to list. As sales gobbled up listings, prices increased. In the inset block below, you can see the increase in highest price homes versus 2022 with approximately the same number of total listings. Don’t forget to allow for double-digit price increases moving some home sales in to the next higher category.
Sales for the past few years are best compared to the orange line representing the 4-year average. Both inventory and sales follow the same pattern, increasing going into the summer and decreasing heading toward the end of the year. I have scribed 2020 and 2021 as dotted lines because they were anomalies, good anomalies but still anomalies. 2024 has been following the same path, but sales value is strong mostly due to the aforementioned high-priced category of sales. The pattern is the same, albeit at a much lower level than the 4-year average.
A different view of the same information is shown below. Each line represents the accumulated number of sales that took place as the year progressed. 2023 was a very slow year in home sales, mainly due to the doubling of mortgage rates. 2024 is following the same path, tracking another year of low sales. Mortgage rates decreased as talk of FED rate relief was popular, but we will need a string of many decreases to get back to a strong market.
Prices are the third factor in the Supply-Demand-Price equation. We have a strong correlation with the shape of both the inventory and sales graphs, with prices increasing as we head into summer and decreasing as we head towards winter. There was previously indication of this happening, but never so pronounced as we have seen for the past three years.
Now to the Simi Valley and Moorpark inventory charts. And yes, there are some differences due to the makeup of inventory price levels. It appears the inventory of active listings is continuing to increase. The inset box shows the movement away from the lowest price category as the continuing price increases have moved the Median price to $850,000, way above the under-$750,000 limit for the lowest price group.
Sales mimic the historic 5-year average pattern, but at a lower level. The number of sales in October 2024 (115) was much lower than the 5-year average of 183 we would expect for this time of year. Mortgage rates may have come down a little but remain almost double the level a year ago.
Finally, prices are following the yearly patterm described above.
Unlike the excitement of next Tueday’s election, the market is moving along reasonably calmly. Inventory is finally available, sales are taking place regularly, and prices continue to trend upwards matching other inflation measures.
Next year will have some major decisions taking place in Washington DC that will affect the housing market. The results of the election and what those newly elected officials decide will have a major impact on the future of our economy, and our markets. The 2017 tax bill measures expire next year, and N.A.R. has been working dilligently to support a couple of major changes, including doubling the capital gains tax deduction of $250,000/$500,000 on home sales, and to rescind or modify the limits on SALT (State And Local Tax deductions). NAR provides us with a seat at the table, as does C.A.R. Let’s hope they are successful.
Have a Happy Thanksgiving.
Chuck