DECEMBER 2022

Dear Clients,

As 2022 comes to a close, we are reflecting on how this year was another fabulous one for the books. We are so grateful for our loyal clients, friends, and family. We continued to help so many families with their real estate goals. Whether it is selling a home our clients have lived in for 25+ years or selling our client’s starter home and helping them purchase a larger property for their growing family, we enjoy being a part of the journey for all of our clients. Our mission has always been to help our clients build generational wealth through real estate, and The Mark Moskowitz Team’s 2023 goals are focused on just that! We cannot wait to continue sharing with you all the strategies of the real estate industry as we continue the monthly newsletter into the new year.

As this is our final newsletter of 2022, I want to give a recap of the real estate market and put some perspective on what we, in the industry, call a “shifting market.” Last month I addressed the rumors of a crashing market, and we discussed the many ways this market is nowhere comparable to the 2008 crash. Well, you asked for the numbers to prove it, and here they are!

As we service the Conejo Valley and San Fernando Valley the most, I wanted to focus on their stats as we do our yearly review. So let’s begin with the Conejo Valley, which is comprised of Westlake Village, Thousand Oaks, Agoura Hills, Oak Park, and Newbury Park. In the table above, you will see the absorption rates highlighted. This is the amount of time it would take to sell all the active listings if no other listings came on the market. Now, remember, the definition of a “seller’s market” is when the inventory supply is less than three months. As you can see, we ended 2021 with an absorption rate of .52, just over half a month’s supply of inventory! Due to the low inventory, we ended up with this artificial bubble in the market; a bubble we have discussed many times in past newsletters. With less than a month’s supply of homes on the market, there was a surplus of buyers trying to purchase a very limited supply of homes, leading to crazy overbidding, high prices, and a firm seller’s market.

As you can see, inventory rates started to rise in the first few months of the year. By March 2022, the end of the first quarter, we had increased to three-quarters of a month’s supply, still a fantastic number. By the end of June, the end of Q2, we were up to almost one and a half months of supply. If you remember, The Feds raised interest rates in April, and the higher interest rates started to affect how quickly homes were selling because by the end of the third quarter, in September, the absorption rates increased to almost a two months supply. And finally, we ended November 2022 with an absorption rate of just under two and a half months. We reach a more normal balanced market as we get to two and a half to five months. As we cross over five, we move to a buyer’s market. We always need to remember that homes priced well and in the best condition will always sell quicker and for a premium in any market. Homes that are more tired and show deferred maintenance will require price adjustments to entice buyers to submit offers. As the number of homes on the market rise, buyers begin to have more influence and push back on the prices sellers ask. It’s basic economics of supply and demand. With more options, buyers are pickier and expect to get more on their “wants and needs” list. As you can see, this market is slowing down; however, numbers don’t lie, and the numbers tell us we are still in a seller’s market, headed towards a more normal market.

Before we jump into the San Fernando Valley, let’s understand what the Active and Sold stats tell us. We started the new year with only 66 active listings on the market, a record-low inventory. By the end of the first quarter, there were 109 active listings, 228 by the end of the second quarter, and 218 by the third quarter. At the end of November, there were 192 active listings, clearly showing the slower market as we entered the holiday season. With many sellers out of town or expecting friends and family over, the number of active listings is always expected to decrease during this time. Finally, let’s discuss the number of homes sold. We ended last year with 128 sold listings, completed the first quarter with 151, and watched the number increase to 159 by the end of the second quarter. As the number of active listings increased, the sales did as well, as there was a pool of buyers who were waiting for more options. Many buyers who had less than 20% down couldn’t compete in the crazy overbidding phase, and finally, there was enough inventory for them to participate in the market. The number of homes sold dropped to 111 by the end of the third quarter, indicating the effects of the interest rate spike. That number continued to decline as we ended November with only 98 sold homes, clearly showing the slowing market and the pressure for prices to come down. Now, as much as the market has slowed, the market is still strong, as we still have an absorption rate of under three months. If the market were about to crash, those numbers would be closer to five and six.

Let’s look at the West San Fernando Valley: Bell Canyon, Calabasas, Encino, Hidden Hills, Sherman Oaks, Tarzana, Woodland Hills, and West Hills. We ended 2021 with an absorption rate of .96, just under a month’s supply of inventory. This number is slightly higher than the Conejo Valley, yet still an incredibly hot seller’s market. By March 2022, the end of the first quarter, that number increased to just above one month’s supply. At the end of June, we were up just under two months’ supply showing the same trend affected by the increase in interest rates. By the end of the third quarter, the absorption rate was just under three months’ supply, heading into a more normal market at a faster pace. At the end of November, the absorption rate was close to three and a half months supply. This shows us that Conejo Valley’s numbers are stronger. This is driven by an influx of buyers moving west looking for better schools, less crime, and fewer homeless people on the streets. Having said that, when we look more specifically at neighborhoods in the San Fernando Valley, we see some neighborhoods outperform other areas of the valley. If you live in one of these areas and want a deeper conversation regarding these stats, give us a call, and we can go more in-depth.

The West San Fernando Valley ended 2021 with 159 active listings. By the end of the first quarter, there were 254 active listings, 503 by the end of the second quarter, and 512 by the third quarter. November ended with 489 active listings, solidifying the market slows during the holiday season. When we look at the homes sold, we ended last year with 279, ended the first quarter with 252, and watched the number increase to 267 by the end of the second quarter. The number of homes sold dropped to 172 by the end of the third quarter; remember, interest rate spike! That number continued to decline as we ended November with only 144 sold homes, clearly showing the San Fernando market on the same downhill decline as the Conejo Valley, just at a faster rate.

Even though we have seen the market drop 15-17% from those crazy record highs, we must remember that the market is still up 3-7% over the record highs we set in the Summer of 2021. Last summer, if you had looked at what your home was worth, you would have been ecstatic at the level your home finally reached. If we keep that number in mind, we still have a strong market that favors the sellers when the house is priced reasonably, and the home is in the proper condition. Remember, this means little deferred maintenance, and the home is as close to move-in ready as possible. Please see last month’s email that goes into more detail about this.

All in all, this was another crazy year of Real Estate. We started with record-low inventory and experienced the fastest rise in interest rates in history. As I have said, there are no signs this market is coming to a crashing halt, and there are no signs that the 2008 market is comparable to the current market. Today is still a fabulous time to buy and sell real estate. It all just depends on what your individual real estate goals are. Do you plan to stay in your home for two years, five years, or ten years? Do you plan to stay in California or move to a different state? Can you turn your home into an investment property, or do you need to sell to make your next move? We need to ask these essential questions to identify what is best for you. Real Estate transactions happen every single day, hundreds of times each week! However, it is a personalized and individual experience, so we make sure to slow down and find out all the information so you can always make the best decision for you and your family. Call us today for a free, no-obligation consultation so we can personalize a strategy for you.

The Mark Moskowitz Team wants to wish you a wonderful holiday season and a happy and healthy New Year! We will see you next year and cannot wait to be your partner as we all grow our wealth!