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What we’re seeing is that the real estate market is mixed. For example, typically when school is back in session, it can signal a major shift. The thinking is that families have already bought a home, moved, and settled in before the start of the school year – halting their house hunting. That’s not the case lately. This month, we’re seeing a pick-up in sales and expect it to continue through September, given interest rates have dropped in recent after a very quick and dramatic increase up through July.

While incredible properties are still selling at some of their highest prices ever, the overall average sales price has dropped, as has the total number of homes being sold each month. The good news for buyers – there is more home inventory available and prices are starting to rein in.

Here are some variables we see:

All in all, our team members are here to guide you through the pivots seamlessly. This is a great time to connect with us to discuss how to best present your home or refine your search.

 

Click Here For Our August 2022 Newsletter

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

– Vivian Yoon & Dennis Hsii, LIC #01925833 / 01919746

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The Big Story

July sees a huge mortgage rate drop and more inventory on the market

Quick Take:

Note: You can find the charts & graphs for the Big Story at the end of the following section.


Home prices continue to reach new highs even as demand declines

Home prices generally stagnate this time of year, so it’s more challenging to ascribe causation for why price growth has decelerated nationally to economic factors — inflation, mortgage rates, supply shortages, and looming recession — when they coincide with long-term seasonal trends. Historically, prices increase in the first half of the year and flatten in the back half. Prices in 2020 bucked this trend, increasing through October before flattening in the last quarter of the year. Although prices rose much higher in 2021, the historical trend returned. This year has, of course, come with different economic and psychological drivers than 2020 and 2021, especially in the housing market. 

For many, if not most of us, the pandemic brought us largely inside our homes, increasing the desire for larger, nicer private spaces. The mass movement to remote work meant that proximity to an office, usually a primary selling point in major metro areas, mattered less or not at all. Many of us experienced our home spaces, work spaces, and communal spaces becoming one, and realized that the home we usually spent little time in would simply no longer work for us. This need for a bigger space, combined with extremely low-rate financing, a substantial increase in disposable income, and more time to look for a new home created a boom in demand in an already undersupplied housing market. As a result, the median sale price rose higher and faster than any other point in history, up 36% over the past two years according to data provided by the U.S. Department of Housing and Urban Development. For reference, in the eight years preceding 2020, the median home price rose a total of 38%. 

As we know, housing isn’t the only asset to rise since 2020. Nearly everything has become more expensive, and inflation (CPI)*, which has rarely ever risen above 5%, ticked above that mark in the summer of 2021 and has only increased since then. The Federal Reserve, which has a dual mandate of price stability and maximum employment, has one major tool: raising the federal funds rate†. By doing so, the Fed indirectly affects the debt markets, thereby increasing other interest rates, such as mortgage rates. 

In the first half of this year, the average 30-year mortgage rate rose nearly 3%. It’s hard to overstate how significantly that rate increase affects affordability. To hopefully simplify the explanation, we will use a $1 million home that is fully financed for illustrative purposes. For a $1 million home, a 3% increase in interest rates raises the monthly mortgage cost by 42%. It’s fairly safe to say that income hasn’t risen by 42% for most people, which means that many potential buyers are priced out of buying homes, softening demand. For those potential buyers waiting for a correction of the residential real estate market, home prices would have to decline by 30% for the monthly costs to be equivalent — that is, $700,000 at 6% is the equivalent monthly mortgage cost of $1 million at 3%. If the housing market experienced such a large correction, there would likely be much larger concerns in the global economy than home prices. Barring a collapse of the entire financial system, supply would simply be too low for a major correction. Luckily for potential homebuyers, mortgage rates dropped by 0.50% in July, and many economists predict that the mortgage rates will flatten out around 5% even as the Fed continues to raise the federal funds rate. This is partially because the market largely understands and has already accounted for the Fed’s rate hike path, which will continue until inflation begins to meaningfully decline and recession worries wane. 

The economy has felt a little uneasy lately — a classic “will they, won’t they?” when it comes to the recession — but for now, we aren’t technically in a recession because job numbers are too good. Demand for homes has clearly softened, which is fine in a severely unbalanced market. We will likely see less significant price appreciation in the second half of the year due to seasonal norms and higher mortgage rates. The market remains competitive and homes are selling quickly. However, buyers are seeing more inventory than last year, which is good for the market. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home.

* The Bureau of Labor Statistics (BLS) collects the prices of approximately 94,000 items from a sample of goods and services to calculate the Consumer Price Index (CPI).
† The federal funds rate is the interest rate that banks get to borrow from the Federal Reserve. Also known as the Fed’s benchmark rate or the risk-free rate.


Big Story Data

The Local Lowdown

We break down three luxury areas in Los Angeles as follows:

Quick Take:

Note: You can find the charts/graphs for the Local Lowdown at the end of this section.


Is the market balancing? Tentatively, maybe!

Median single-family home prices rose month-over-month across the selected markets. Usually, median price is a great barometer of housing trends, but for luxury markets, median prices tend to have more variability month-to-month. Price per square foot, which accounts for size, shows a more accurate price trend over the past two years. The North Beach and West Side price per square foot is below peak, while the South Bay reached a new all-time high in July. These price movements are within the bounds of normal price variability, but after large price gains, it feels like any downward movement signals a market correction. As mentioned in the Big Story, prices tend to stagnate in the summer and fall months when inventory is at its highest, so we aren’t ringing the alarm bells quite yet. Homes over the past five years have become less affordable, yet demand boomed. With 30-year mortgage rates potentially settling around 5%, fewer potential buyers will participate in the market than they did last year when mortgage rates were at all-time lows.

Supply is still historically low, which will protect prices from experiencing a major downturn. Prices will likely follow a similar trend as last year, holding relatively steady through the summer and fall months. If you’re following home prices closely, as we tend to do, you don’t need to worry about losing equity in your home, or softening demand, or even an official recession — so long as it doesn’t affect your job. The housing market remains incredibly strong in Los Angeles.


Sales slowdown

Housing inventory declined in July, indicating that inventory already reached the peak for 2022 in June. Inventory tends to peak in June in the selected markets, which appears to be the case this year. The number of homes for sale has trended lower since August 2020 and settled at historically low levels. There were 29% fewer homes on the market in July 2022 than in July 2021. With the drop in sales and new listings in July, the peak inventory levels for 2022 will undoubtedly be the lowest on record.

The decline in sales indicates that demand is softening. We aren’t saying that demand is low, but it’s trending closer to balanced between buyers and sellers than we’ve seen in years.


Months of Supply Inventory inches toward a more balanced market

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). Luxury markets tend to have a higher MSI because there are fewer market participants. Currently, the South Bay MSI firmly indicates a sellers’ market. Despite MSI indicating a slight buyers’ market in North Beach, it is still definitely a sellers’ market as well. The West Side MSI jumped due to the drop in July sales. One data point does not make a trend, but we are watching closely. 


Local Lowdown Data

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Back To School Deals?

As summer winds down and families prepare for the upcoming school year, August normally signals the end of real estate’s busiest season. Here in Southern California, there are still deals to be had for buyers who didn’t close on a home during the summer. 

While sellers are not seeing a lot of competition yet, homes are still falling out of escrow at a higher rate than earlier this year due to growing uncertainty and pessimism regarding the market (and oftentimes buyer’s remorse after acting too quickly). Still, trying to sell a home before winter approaches remains a good strategy, and right now there are more buyers than homes on the market, which is a positive for anyone trying to sell a property.

Buyers seeking deals might benefit right now because many others are waiting on the sidelines. For one thing, interest rates have dropped steadily for the past few weeks, from a high of 5.81% to below 5%, sparking increased activity in refinances and home purchases. In this market, it is especially important to rely on trusted and experienced agents to get the best deal regardless of budget. Please feel free to contact us with any real estate questions you may have and thoroughly enjoy the rest of your summer.

Click Here For Our August 2022 Newsletter

Is It Too Late To Sell?

As we near the end of summer and approach the start of the new school year, we are being asked if there is still time left in the busy selling season to list a home for sale? 

The answer is yes, we can still sell your home even though the summer is nearly over. The reason is that there are many buyers who may have missed out and are still looking. Your home might be the perfect fit for them! Also, we may have just the right buyer that can purchase your home off-market.

These past two years have blurred the usual lines of normal buying and selling patterns, but our team members can skillfully navigate even uncertain waters. We are here to help you whether you are looking or listing. If you are curious about the current market, we are happy to share our thoughts with you!

Click Here For Our July 2022 Newsletter

Real Estate Market Is Currently Mixed

Looking at the current state of the real estate market, the best description would be that there’s a lot of variation.  It’s a mix of conditions and circumstances. The market is both strong and also showing signs of weakening. So how is that possible? Here’s a real-life example: We recently had a listing receive multiple offers, with several interested buyers, and at the same time another property fielded zero offers. In a market with historically low amounts of inventory, this is an anomaly. 

Right now, we’re seeing a lot of variability in prices and offers based on the type of property going to market. There is a difference in interest levels depending on whether the property is highly attractive, with few if any flaws, and whether the property is simply solid or average. Mediocre properties that look dated, with few if any upgrades are currently flooding the market, with many of the sellers still trying to command top dollar. Those are the properties that see fewer offers.

Buying and selling in a mixed market like the one we are in is where the quality of representation truly matters. Whether you’re buying or selling in these tumultuous times, we would be honored to be your guides on this journey, and we are committed to finding you the right situation and outcome you’re looking for. 

Introducing New Team Member Alyssa

Welcome Alyssa Rozenbaum to the Highland Premiere team! Alyssa is a business savvy, proactive real estate agent with a commitment to developing positive client relationships. A Brazilian native, she speaks four languages: English, Portuguese, Spanish, and French. She uses her exceptional communication skills to help clients reach their goals of homeownership.

Alyssa’s real estate journey began in property management, a role she worked in for 14 years before earning her license in 2021. She has significant social media marketing experience and is able to create compelling listings to attract potential buyers. Transparent and direct, she works to understand her clients’ needs, and she uses her knowledge of the local market to help them find their dream properties. Her secret to success is being calm yet firm in her negotiations, and her clients achieve the best possible price in each transaction.

In her free time, Alyssa enjoys baking homemade bread, including challah and sourdough. She is active in the local Brazilian community and enjoys helping students and couples who are new to the United States find housing in the Los Angeles area. 

Highland Premiere Scores an A+ Rating on Expertise.com

We were delighted to learn that Expertise.com recently bestowed Highland Premiere with an A+ rating, recognizing us as one of the best real estate agencies in Santa Monica! This website is a source for professional services in the community. 

Unsolicited, Expertise.com identified Highland Premiere as a top local real estate firm, validated our credentials, licensing and expertise then scoured public records, reviews and review scores to analyze our reputation. We were scored on our professionalism, responsiveness, friendliness, helpfulness and attention to detail. We are proud of our team and how committed they are to our clients. Read how we scored straight A’s here.

Click Here For Our July 2022 Newsletter

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

– Vivian Yoon & Dennis Hsii, LIC #01925833 / 01919746

See Your Home’s Value

The Big Story

To be, or not to be? That is the recession.

Quick Take:

Note: You can find the charts & graphs for the Big Story at the end of the following section.


Rising rates, rising prices, and economic slowdown, but homes still ahead

Economic outlooks seem to change month-to-month, and yet again, we find ourselves in a unique moment in time. The Fed rapidly switched from loose to contractionary monetary policy in March and recently increased the federal funds rate by 0.75% — the biggest increase since 1994. The effects have yet to curb inflation, which is still at a 40-year high (+8.5% CPI year-over-year). On a monthly basis, the Bureau of Labor Statistics (BLS) collects the prices of approximately 94,000 items from a sample of goods and services to calculate the Consumer Price Index (CPI). We didn’t look into everything in the BLS sample, but if you’re like us, it feels like everything we buy is closer to 50–100% higher than it was a year ago, or even several months ago. While prices are rising, the cost to borrow has also gotten more expensive, which is dampening demand. 

We are starting to see this play out in the housing market. We are noticing more inventory coming to market, coupled with fewer sales. We must, however, provide a caveat: The housing inventory is still historically low. As rates rise, especially as rapidly as they have this year, buyers can get priced out of the market quickly and must reconsider their budgets. 

A year ago, the average 30-year mortgage rates hit their lowest levels in history and have more than doubled since then, to 5.81%. Let’s take a look at some numbers to see how assets have performed in the first half of 2022: The S&P 500 declined 21% (the worst first half of the year since 1970), the NASDAQ is down 30%, and Bitcoin and Ethereum have dropped 59% and 71%, respectively. At the same time, U.S. housing prices increased by 15% nationally. Home prices, simply, rarely go down. Even if you weren’t directly affected by the 2006 housing bubble, you likely knew someone who was. One lasting effect of the housing bubble is the perception that home prices decline much like other risk assets, which isn’t the case. Stocks, bonds, and cryptocurrency are fungible assets that allow for large, multiplayer markets. The housing market has only recently become more efficient because of technology, but too many factors play into a home’s value, preventing regular downturns in the market. Large declines in liquid assets do affect demand for homes, though, as people tend to reconsider buying when they feel (and objectively are) less wealthy during dips in those markets.

But what about the Fed’s intention to slow down the economy by decreasing demand through raising rates? Won’t that cause a recession and lower home prices? We’ve already seen some slowdown in the Q1 2022 Real Gross Domestic Product (GDP)* data. The Fed’s goal is to slacken growth enough to curb inflation, but not enough to send the U.S. into a recession, which is a challenging needle to thread. The National Bureau of Economic Research, which officially declares recessions, defines a recession as a significant decline in economic activity spread across the economy that lasts more than a few months and is normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. With unemployment near all-time lows and a surplus of job openings, we may end up avoiding an official recession, even if GDP decelerates for multiple quarters. U.S. GDP is expected to outpace China’s this year for the first time since 1976, which sounds positive but could be a clear sign of a major slowdown given our economic ties.

Home prices are highly likely to continue rising despite rising rates. If you were waiting for rates to drop, they won’t. The low but rising supply continues to make the market competitive and, as more homes come to market, could mark the early stages of market normalization. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home.

*Real GDP is inflation-adjusted GDP, which is the broadest measure of goods and services produced. All references to GDP use Real GDP figures.


Big Story Data

The Local Lowdown

We break down three luxury areas in Los Angeles as follows:

Quick Take:

Note: You can find the charts/graphs for the Local Lowdown at the end of this section.


Home prices soften in June

Median single-family home prices declined month-over-month. Usually, median price is a great barometer of housing trends, but for luxury markets, median prices tend to have larger swings month-to-month. Price per square foot, which accounts for size, shows a more accurate price trend over the past two years, with June prices landing just below peak. After two years of significant price growth, it’s hard not to think that rate increases have caused prices to bump into a ceiling. Without the aid of super low financing options, fewer potential buyers will participate in the market, which already tends to have fewer players due to price point. So far in 2022, the average 30-year mortgage rate has increased over 2.5%, which equates to an approximately 33% increase in monthly mortgage payments. In other words, the new mortgage rate adds $1,460 per month on a $1,000,000 30-year fixed mortgage, for example.

Even with the rate hikes, which are only expected to continue this year, home prices aren’t dropping outside of normal month-to-month variability, nor would we expect them to. Supply is still historically low, which will protect prices from experiencing a major downturn. Prices will likely follow a similar trend to last year, with mild growth through the summer and fall months. But, as we mentioned earlier, as rates increase, the same price becomes more expensive, unless you are buying with cash. 

It’s so incredibly easy to get wrapped up in the recent past, during which home prices grew massively. We can’t stress enough how uncommon that price growth was and, most likely, will continue to be. Because homes are not only living spaces but also investments, a steadier growth rate of 6–8% annually is still good for investing purposes. 


Sales slowdown

Southern California’s housing inventory continued to rise in June, following historical seasonal trends. Over the past two years, inventory has trended lower and settled at a depressed level. A comparison of the number of single-family homes on the market in June 2022 vs. June 2019 shows that inventory is down 50% in North Beach, 29% in the West Side, and 44% in the South Bay. Luxury LA markets are particularly sensitive to rate hikes due to the high absolute dollar cost of housing. Many homebuyers are also home sellers, moving from one home to another. Homeowners who bought or refinanced over the past two years locked in one of the lowest rates in history, making moving a more difficult financial decision. Although the first half of 2022 had the lowest inventory on record, we were pleased to see that inventory increased even slightly. The next two to three months will likely show us peak inventory levels for 2022, which will undoubtedly be the lowest peak inventory on record.


Months of Supply Inventory increasing, but still a sellers’ market

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). Luxury markets tend to have a higher MSI because there are fewer market participants. Currently, the South Bay MSI firmly indicates a strong sellers’ market. Despite MSI indicating a buyers’ market in North Beach and the West Side, those are definitely sellers’ markets as well. Without a huge number of new listings coming to market, we will continue to see a sellers’ market for the foreseeable future.


Local Lowdown Data

Subscribe To Our Newsletter Here

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

– Vivian Yoon & Dennis Hsii, LIC #01925833 / 01919746

See Your Home’s Value

The Big Story

Mortgage rate increases slow; housing stays hot

Quick Take:

Note: You can find the charts & graphs for the Big Story at the end of the following section.


Prices continue to rise as mortgage rates hit 13-year highs

It’s become hard to accurately describe the state of the housing market in the face of rising rates, historically low supply, and high but softening demand. Real estate professionals often say the market is cooling to indicate a turn from a sellers’ to a buyers’ market, but that feels like an overstatement. Additionally, some recent articles were published with titles like “Cracks in the Housing Market,” which also may make the reader erroneously think we are headed into a major correction. After much deliberation, we decided to define market hotness with a pepper analogy. The current market is going from the hottest pepper in the world, the Carolina Reaper, to the second hottest, the Trinidad Moruga Scorpion. Yes, the market is technically becoming less hot, but it’s still about as hot as it gets. Ultimately, we believe we are headed toward a steadier state of growth rather than a significant home price reversal. Home prices will still fluctuate month-to-month, which is normal, but they will generally trend higher at a slower pace. A slower growth rate is a healthy growth rate. 

In May, home prices increased around 16% year-over-year, which means that prices would double every 4.5 years if that trend were to continue. That kind of rapid growth is simply unsustainable and would eventually lead to a major market collapse. Based on what happened as a result of the 2006 housing bubble, we know that mass wealth destruction is not the path we want to take. The Federal Reserve (the Fed) is actively raising rates to bring down the growth rate by making borrowing more expensive, thereby lowering demand. Luckily, we are starting to see inflation respond to the Fed’s monetary policy, although it is still near a 40-year high. 

In 2022, mortgage rates have moved about 2% higher for 30- and 15-year fixed mortgages, reaching 5.09% for the average 30-year fixed-rate mortgage and 4.32% for the average 15-year fixed-rate mortgage as of June 2, 2022. Every 1% rate increase raises the monthly mortgage payment significantly — by about 13%. In this environment of rising rates and rising inflation, all-cash purchases become more attractive because financing is more expensive and money is worth less over time. In the first quarter of 2022, all-cash purchases increased, reaching the highest levels since 1988. Economists now estimate that the average 30-year mortgage rate could climb above 6% in 2022. Because the Fed indicated the path of rate hikes for the rest of the year, we expect that mortgage rates will, at most, reach around 7% this year for prime borrowers. 

If it feels like you missed a unique opportunity to finance a home at under 5%, we are sorry to say that you did. However, you are in good company and can still take advantage of low rates. While it can feel like rates are high when they’ve risen from the all-time low of only a few months earlier, a rate of 5% is still historically low. Since 1971 (the start of the data set), we’ve had 2,671 weekly 30-year mortgage data points, only 24% of which reflected rates below 5%.

The market has remained so hot because of supply — or lack thereof. In May, the housing supply ticked up ever so slightly but is still 49% lower than the number of homes on the market in May 2020. We are entering what is traditionally the hottest time of year for the housing market with a record low supply of homes. Through May 2022, which had the lowest inventory on record, home prices increased 15%. The chief economist at Realtor.com, Danielle Hale, explains that the market is about 5.8 million single-family homes short, which means we’re four to five years behind in building new homes. Although single-family housing starts — homes that have begun construction — have slowed recently, multi-unit housing (5+ units) starts have reached their highest numbers since 1986.

If you are considering buying a home, there aren’t many reasons to wait. Home prices and rates are still rising. The low but rising supply continues to make the market extremely competitive. We are starting to see some softening in demand, but not nearly enough to balance the supply side of the market.


Big Story Data

The Local Lowdown

We break down three luxury areas in Los Angeles as follows:

Quick Take:

Note: You can find the charts/graphs for the Local Lowdown at the end of this section.


Home prices continue to rise as new listings meet high demand

Single-family home prices in the selected Los Angeles markets are historically high. It’s still too early to determine how increasing rates will affect the market. However, in a rising rate environment, buyers are better off locking in an interest rate sooner rather than later. Since the start of 2022, the average 30-year mortgage rate has increased 2%, which equates to a 27% increase in monthly mortgage payments. Yet prices keep moving higher. 

One reason that home prices continue to rise is that buying a home is not only a financial process but also an emotional one. Over the past two years, our homes have become such a large part of our lives, with many of us moving to permanently remote or hybrid work. As more homes come to the market, as is typical in the first half of the year, buyers are more likely to find the home that’s right for them in what’s been an incredibly competitive market. Even with increases in mortgage rates (which, again, are still historically low), it’s reasonable to pay more for the well-being that comes with buying the right home. For most of us, our home is our largest asset and store of wealth, so treating it as such makes sense.


Inventory holds steady at a low level

The selected Los Angeles markets’ inventory marginally increased in May, which indicates that home supply will remain depressed this year. The high demand and lack of new listings over the past year brought supply to record low levels. In times of normal seasonality, inventory increases in the first half of the year. However, that trend hasn’t happened yet this year, and nothing in the market is signaling a rush of sellers is coming.

Even though inventory is low, sales remain relatively high. This trend once again highlights the high demand in the area. Sellers can expect multiple offers, and buyers should come with competitive offers.


Months of Supply Inventory further indicates high demand relative to supply

Homes are selling extremely quickly in these luxury markets. Buyers must put in competitive offers, which, on average, are 98–102% of the list price.

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). Luxury markets tend to have a higher MSI because there are fewer market participants. Currently, North Beach and South Bay MSIs firmly indicate a strong sellers’ market. Despite MSI indicating a buyers’ market on the West Side, it’s definitely a sellers’ market as well. Without a huge number of new listings coming to market, we will continue to see a sellers’ market for the foreseeable future.


Local Lowdown Data

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With spring in full swing and heading into the summer months, the trend of multiple offers within days of listing is still holding true. As a team, we are constantly gathering and analyzing data, and closely monitoring interest rates and contracts signings.  This helps us accurately gauge how we approach each transaction. 

Buying or selling a home is one of the most important decisions you will make in your life, and our goal is to help our clients navigate the real estate market in any situation. Regardless of whether the market is cooling or blistering hot, we can help you make the most sense of it, and are ready to help guide you on your home buying or selling journey.


Click Here For Our June 2022 Newsletter

Welcome, Jennifer!

We are proud to welcome Jennifer Chan to the Highland Premiere team. Jennifer lives in Irvine with her three children and primarily serves the South Orange County market. Before earning her real estate license, her background included finance, marketing, communication and project management. She is passionate about delivering quality customer service for her family of clients, and we’re thrilled to welcome her to our team!

We are also pleased to introduce you to the newest member of the Yoon family.  Ivy is an adorable puppy who is clearly learning from and leaning on big sister Rosie for comfort. Both Rosie and Ivy were adopted from Wags and Walks, a rescue group we are proud to support. As you can see in the photos, Ivy is already bonding with Rosie. Welcome to the family Ivy!

Click Here For Our May 2022 Newsletter

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

Vivian Yoon & Dennis Hsii, LIC #01925833 / 01919746

See Your Home’s Value


The Big Story


Rising rates may not normalize the housing market, but they may help inflation


Quick Take:

Note: You can find the charts & graphs for the Big Story at the end of the following section.


Prices continue to rise as mortgage rates hit 13-year highs

After the Fed’s May meeting, Fed Chair Jerome Powell announced that they are raising their benchmark rate by 0.50%, the largest hike since 2000. Earlier this year, the Fed was expected to raise interest rates by 0.25% at least six times this year, going from 0% to 1.90%. Now that each increase will most likely be 0.50%, the market expects the federal funds rate to reach 2.75% to 3.00% by the end of the year, which would be the highest in 15 years. Although the fed funds rate doesn’t directly affect mortgage rates, the rate hike moves into the broader economy quickly. Over the past four months, mortgage rates have moved about 2% higher for both 30- and 15-year fixed mortgages. Economists now estimate that 30-year mortgage rates could climb above 6% by mid-2022, which is fast approaching. Because the Fed indicated the path of rate hikes for the rest of the year, we expect mortgage rates to top out at around 7% this year for prime borrowers.

A rising rate environment increases short-term demand as buyers try to lock in lower mortgage rates, which is what we are seeing now. The increased short-term demand is driving prices right now outside of supply, which begs the question: Will higher mortgage rates actually drive down prices? No, they sure won’t.

Using history as our guide, we can see that home prices continued to rise even as mortgage rates peaked at over 18% in the 1970s, which would translate to about $7,500 per month on a $500,000 loan. Luckily, we aren’t going back to those rates. Higher rates, however, will do exactly what the Fed intends, which is to take money out of the economy and decrease overall demand. The average 30-year mortgage rate was 3.11% in December 2021, rising to 5.10% by the end of April 2022. If you bought a home in December and financed it with a $500,000 mortgage loan at 3.11%, your monthly spend on principal and interest would be $2,138 — versus $2,715 if you got the same loan in April 2022 at 5.10%. Over the life of the loan, you’ll spend $207,720 more at 5.10%. From the Fed’s perspective, that equates to roughly $500 less per month to spend on goods and services, bringing down aggregate demand when we multiply that reduction of disposable income across households. The gradual rate increases are meant to avoid sending the economy into a recession.

In addition to rising rates, supply still drives home prices. In April, the housing supply ticked up ever so slightly, but it’s still 60% lower than the number of homes on the market in April 2020. We are entering what is traditionally the hottest time of year for the housing market with a record low supply of homes. Over the past four months, which had the lowest inventory on record, home prices increased 12%.

If you are considering buying a home, there aren’t many reasons to wait. Home prices and rates are still rising. The low supply continues to make the market extremely competitive. We are starting to see some softening in demand, but not nearly enough to balance the supply side of the market.


Big Story Data

The Local Lowdown

We break down three luxury areas in Los Angeles as follows:

Quick Take:

Note: You can find the charts/graphs for the Local Lowdown at the end of this section.


Home prices have yet to be hit by rising rates

Although below peak, single-family home prices in the selected Los Angeles markets are still historically high. It’s still too early, however, to determine how increasing rates will affect the market. Mortgage rate hikes only lower demand in the long term. In the short term, demand increases as buyers try to lock in lower rates. Over the past four months, the average 30-year mortgage rate has increased 2%, which means a 27% increase in monthly mortgage payments, yet prices keep moving higher.

The factors now affecting home prices are anticipated to have mixed results, unlike the past two years when all factors caused prices to increase. Rising interest rates, which will hopefully curb the rising 40-year-high inflation rate, will make homes less affordable and dampen demand over the rest of the year. They may, however, also lower supply as current homeowners reconsider their plans to sell. 

Many homebuyers are also home sellers, moving from one home to another. Newer homebuyers and homeowners who refinanced over the past two years locked in one of the lowest rates in history, making moving a more difficult financial decision. This could keep supply unseasonably low with fewer new listings coming to market. In general, the Fed doesn’t have a tool to deal with supply-side issues: It uses monetary policy to affect demand, making money more or less expensive. As a result, the Fed’s rate hikes may result in unintentional effects on supply. In Los Angeles, the lack of housing supply will keep prices rising in the coming months.


Inventory holds steady at a low level

The selected Los Angeles markets’ inventory didn’t change significantly in April, which serves as an early indicator that home supply will remain depressed this year. The high demand and lack of new listings over the past year brought supply to record low levels. In times of normal seasonality, inventory increases in the first half of the year. However, that trend hasn’t happened yet this year, so the next three months will help us forecast how inventory levels will trend for the rest of the year.

Even though inventory is low, sales remain incredibly high, especially when we account for available supply. This trend once again highlights the high demand in the area. Sellers can expect multiple offers, and buyers should come with competitive offers.


Months of Supply Inventory further indicates high demand relative to supply

Homes are selling extremely quickly in these luxury markets. Buyers must put in competitive offers, which, on average, are 98–102% of the list price.

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). Luxury markets tend to have a higher MSI because there are fewer market participants. Currently, North Beach and South Bay MSIs firmly indicate a strong sellers’ market. Despite MSI indicating a buyers’ market on the West Side, it’s definitely also a sellers’ market. Without a huge number of new listings coming to market, we will continue to see a sellers’ market for the foreseeable future.


Local Lowdown Data

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