Market Update: Forecast Q3 2024
Aug 2024-Presenter: Steven Thomas | Notes: Sam Louis | Location: Newport Beach, CA | 7PM PT
Summary
Yesterday, August 2, 2024, mortgage interest rates hit a nine-month low, hovering around 6.2%.
Affordability Impact: For example, on a $1,000,000 home, the drop in mortgage rates to 6% improves affordability from $850,000 at 8% to $1,042,000. This results in a $1,100/month cheaper payment.
Market Dynamics: Inventory has increased from last year but remains below pre-COVID levels. Homes are still less affordable, especially for entry-level buyers. The return of open houses reflects a balanced market due to high interest rates, the lowest since December 2023.
Market Strength: The housing market remains robust with strong lending practices, low foreclosure rates, and stable employment. While demand is decreasing and price reductions are common, inventory remains low compared to past market crashes.
Elections and Real Estate: Elections have minimal direct impact on real estate, although post-election policy changes can influence the market.
Overall, despite challenges in affordability, the housing market is strong and stable, with potential opportunities for buyers as interest rates remain favorable.
Detailed Analysis
Market Conditions
Inventory Changes:
- Inventory has increased compared to last year but remains below pre-COVID levels.
- Last year (January to April) saw a decrease in inventory.
- Affordability Issues: Homes are becoming less affordable, especially for entry-level buyers, due to high prices and interest rates.
Market Shifts
- Open Houses: Open houses are returning, indicating a shift towards a buyer-friendly market.
- Balanced Market: The market is more balanced today than last year (same time) due to high interest rates.
Strength of the Market
Robust Market: The housing market is strong with:
- Robust lending practices
- Low foreclosure rates
- Strong credit scores
- Stable employment
- Record equity and ownership rates
- Low fixed payments
No Crash Expected: The housing market is considered the strongest in history, with no crash anticipated.
Demand and Inventory
- Decreasing Demand: Demand is slowly falling this year.
- Low Inventory:
- 1.2 million homes for sale compared to over 4 million during the last crash.
- 3,425 homes in Orange County (OC) last year, down 28% to 2,470.
- Pre-COVID levels saw 6,753 homes in OC on the market.
- Active inventory is decreasing. It will like decrease more as we head toward the end of the year.
Interest Rates
8/2/2024 is the lowest interest rates in 9 month (Around 6.2%)
- 84% of Californians have interest rates of 5% or lower.
- After two years of rates above 6%, people are tired of waiting.
- Current rates are headed towards 6%, with recent decreases making payments cheaper.
- Today (August 1, 2024) marks the lowest interest rate since December 27, 2023.
- Economic Influence: Interest rates are influenced by:
- Job market (~4.3% unemployment rate)
- Inflation (currently at ~3%)
- Retail sales growth (flat)
Market Performance
- Days on Market:
- Average days on market is 69, compared to 47 last year - nationally.
- North Tustin sees 110 days on market from a jump from 55 days.
- Luxury Market:
- Luxury market inventory increased by 52% year-over-year.
- 44% more homes sold compared to last year.
Pricing and Sales
- Price Reductions:
- 32% of homes in OC and 39% nationally have reduced prices at least once.
- Distressed Sales: Only 8 distressed sales in OC, compared to 57 in 2019.
- Mortgage rates dropping to 6% improve affordability from $850,000 at 8% to $1,042,000.
This results in a $1,100/month cheaper payment.
Miscellaneous
- Election Impact: There is no evidence that elections directly affect the real estate market, though policy changes post-elections can have an effect.
- Economic Calendar: Fxstreet.com is recommended for tracking the economic calendar.
Message to Buyers
Buyers are urged to act now as falling interest rates may lead to increased market activity and less favorable buying conditions in the future as interest rates are on a downward trend, whcih could drive demand.
REVIEWS
- Mariam zakiSam helped us get our dream home. The conditions we were putting for the house with the budget was super hard to find in this crazy market. With his hard work, patience, support and professionalism, Sam was able to make our dream come true. Our family won’t forget all what he do to help us have that house. I recommend Sam for home buyers who want a reliable, honest and professional agent to work with. He’s such a great person!
- Arman Haghighi
- Krissy AdamczykSam was great to work with! He was very collaborative in working with the buyer and lender, and also good with communication throughout the escrow process. Thank you Sam!
- DANIEL J. PIRZI had the pleasure of working with Sam recently on the purchase of my client's home in North Tustin. Sam was a pleasure to work with and I will look forward to crossing paths on a deal with him again in the future. He is the kind of Realtor that you want to have on the other side of a deal.
- BrandonWorking with Sam was an absolute pleasure. He was extremely communicative, professional and responsive. Looking forward to working together again in the future. Thank you Sam.
- Maged DeriasI cannot recommend Sam highly enough! As my listing agent on my recent sale, he exceeded every expectation and made the entire process seamless. Sam's attention to detail was impeccable—from staging advice to crafting a winning marketing strategy that truly showcased my property's best features. His communication was flawless; he kept me informed every step of the way and was always available to answer my questions. He managed to secure multiple offers within days of listing and skillfully negotiated to get me the best possible deal. His professionalism, expertise, and genuine care for his clients set him apart in this industry. If you’re looking for an agent who will go above and beyond, look no further than Sam. Thank you, Sam, for your exceptional service!
- Mohammad RashidianSam helped us to find our ‘Forever Home’! It was a house we didn’t think was for us, but he asked us take a 2nd look…we were home! He helped us with the purchase of the home, finding the best lenders and just about anything else we may have needed to get the job done. He also sold our other home for us. He did all the things you’d want an agent to do for you and even more. He was always available and kept us in the loop every step of the way. He got us a great deal on both ends! I would definitely use him again, but he found us what we hope to be our last move! Thanks Sam!
- Krystina LipinskiI had the pleasure of working with Sam on a recent transaction. His expertise and professionalism are second to none! He negotiated expertly with all parties which was a major factor in closing the transaction in a timely manner. I highly recommend Sam as a seller's and buyer's agent. He will always look out for his client's best interest!
- Tony BacilyI was a bit hesitant to give him the listing in the beginning since he never dealt with a high price point but after talking talking to him I felt he was really sincere and caring for his clients and this is just not a job for him. I decided to move forward with him and not with other bigger names. Sam ended up exceeding my expectations every step of the way. My house sold at the highest price point in my community and closed in less than 30 days. I would trust this man with a 100 mil listing. Good job Sam and I will always be coming back to you.
- Jesse Ramirez
- Astrid AshworthI highly recommend working with Sam Louis from Louis Estate Group. He is a true professional with a great focus on service to his clients. I truly enjoy working with Sam and his true passion to help people get the best experience! This is the person you want on your team!
- Brian AdamsAs a home inspector I really appreciated Sam. When I showed up the entire house was ready for me. Let's were on, all doors were unlocked. Access was easy and this made my job quicker. This guy really knows how to show a house.
- Ajay ShahI have bought and sold many homes over the years and Sam was by far the best agent I've ever worked with. Sam was our buyer's agent for a property and the circumstances were that we made a cash offer on a house and needed to close fast. We ended up closing in 9 days from offer to having the keys in our hands. Along the way, we went back and forth with the seller to negotiate more things in the deal. Sam handled the negotiations like a champ. Sam was available via text day and night, and so he handled my and my wife's annoying (and sometime repetitive) questions. Before we found the house, Sam was super patient recommending homes we should see and then dealing with the numerous "picky" reasons we thought they weren't perfect for us. Actually, the house we ended up buying was not even one we were going to see, but Sam strongly encouraged us to see it based on what he knew our preferences were. Now Sam is going to represent us on the sale of our house. If you are looking for an agent who has your best interest in mind, is patient, is almost too kind, but is super competent and will fight to get you the best deal, Sam is definitely your man.
- Amera KchechWorking with Sam has been a great pleasure. He is a hard worker and ensures that the clients are happy. He is working non-stop to ensure that the client's needs are met and all of their questions are answered within a timely manner. He is literally working 24/7 to help the client reach their goals and find something that they really like, and can be reached any time. He fights for his clients as if he is fighting for his own family members just to ensure that the client is really happy and comfortable each step of the process. He simplifies the process and makes it as smooth as possible. He is very patient, understanding, responsive, extremely genuine, and won't pressure the clients into doing something they are not comfortable doing. It was an honor to work with Sam and I'd highly recommend him to anyone who is interested in purchasing a home, because at the end, not only you meet a very hard-working, smart relator but you gain a friend.
- justin pratherSam was a pleasure to work with during the home inspection, very professional, great communication and easy to work with.
- Jordan SongIt was a great experience to work with Sam for a smooth transaction. Easy to reach and communicate. Highly recommended.
- Rana RiadI worked with Sam, he provided impeccable end-to-end service, flawlessly and effectively meeting our needs within our budget. Always available, he facilitated everything from lender connections to inspections and insurance, making the whole process seamless. His knowledge and up-to-date understanding of market trends made the experience exceptional. I highly recommend his services for a comprehensive and excellent real estate journey.
- Ramy AtallaAs a first time home owner, Sam has made the experience as seamless and stress free as much as possible. Very understanding to all our requests and change of heart throughout the process with nothing but our best interest at heart. When it came down to the details, Sam walked us through the process step by step and handled the negotiations with the seller as a true professional and landed us the best deal possible. Thank you Sam for your unbelievable work ethics and your dedication to your clients.
- charan k
- Sandy WissaAmazing experience with the Louis estate group is an understatement. Sam was an awesome agent for my husband and I when we were looking for our home. He truly went above and beyond for us. He's extremely organized, he had a document set up for us with all our viewing with pros and cons and notes to remember each one not to mention he went with us to every singe showing and was a great support throughout. His communication is on point and he's super prompt. And when we finally found the one house we loved he was a great asset in negotiating and managed to help us get our dream home that had over 12 offers and we managed to close in 7 days which is unheard of. His recommendations on lenders and inspectors made all this possible. We are grateful and thankful we had him in our corner and we can't recommend Sam enough.
- Larry HodelSam was a pleasure to work with and always stayed on top of the entire process, actively coordinating with everyone in the transaction.
- Shady WassifI had the pleasure of working with Sam for the purchase of my new house. From the moment I reached out to him, he displayed a deep understanding of the local market and listened attentively to our needs and preferences. Throughout the entire process, Sam was incredibly responsive and proactive. He promptly scheduled viewings, provided detailed information about each property, and guided me with expert advice. Sam demonstrated excellent negotiation skills and worked tirelessly to secure the best deal on my behalf.His friendly and approachable demeanor made the entire experience enjoyable and stress-free. Thank you Sam for your exceptional service.
- Mitch FredericksI highly recommend Sam Louis as your next real estate agent. Sam and I have been working together for the past year and a half. Sam is friendly, experienced and knowledgeable about the real estate market.
- Chris KnappettI can’t speak highly enough of Sam Louis as the Buyers agent for a recent Home Inspection I provided for his Buyer. His professionalism, knowledge, honesty, integrity and hard work ethics are very much appreciated and respected from not just myself through this process, this positive, professional rapport was also clearly evident in the interactions I was able to observe between the client, homeowner, and listing agent as well. I would have no hesitation recommending Sam to others.