August Market + Economic Update 8/6/2022
As we enter the full swing of summer, we wanted to take a moment and reflect. The year has brought some unexpected changes to the economy and to the world stage. It has also been a remarkable year for Los Angeles real estate with record breaking sales. More than anything, this year has been remarkably gratifying as we have helped many of our clients far surpass their real estate investment goals and find their dream homes.
As always, thank you for your continued support!
Mark, the Founder of AllOneWealth, and I, are excited to provide an economic update with valuable information, industry insight, and professional guidance on the latest key trends.
Interested in learning more about markets, inflation, QE or how you can take advantage of current investment opportunities? Schedule a call with us.
Warmly,
Adam & Mark
State of the Market:
The Summer thus far has the Los Angeles real estate market stabilizing. Property values have plateaued and we are seeing more frequent price drops as sellers are looking to cash in on their gains over the past couple years. Although interest rates were recently hiked 75 basis points, mortgage rates have actually gone down slightly. Mortgage demand has decreased to pre-pandemic levels and sales volume is going down also. As the market cools, we are seeing fewer bidding wars and the pendulum in certain neighborhoods is swinging towards the buyer’s side. Malibu in particular is fully a buyers market.
If we have learned from the past six recessions, other than the crash of ‘08, property value has gone up slightly as the economy contracts. Owning property remains one of the best hedges for inflation, and demand for Westside property in Los Angeles is perennially high, offering homeowners some peace of mind.
We will continue to monitor the market and keep you up to date on trends as they develop.
Enjoy your weekends!
Adam
MARK'S TAKE ON THE STATE OF THE ECONOMY:
Cautiously optimistic..
A week of massive gains for the stock market incentivized by improving economic data, a 75 basis point federal funds rate bump, and positive remarks by Fed Chairman, Jerome Powell.
The market still has a long way to go, with mixed market data, but this recent promising shift in trend will certainly spur some optimism. While the conversation of a deep ‘recession’ seems to be lightening. I remain optimistic – but I would caution that we’re not quite out of the woods just yet.
All the best,
Mark
MARKET UPDATE
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A huge week of earnings and economic news was mostly positive for stocks, with major US indices taking a leg maintaining momentum with strong weekly gains and finishing with the best monthly performance of the year.
The Nasdaq Composite led domestic indices with a 4.7% gain, S&P 500 was up 4.3%, and the Dow Jones Industrial Average finished 3.0% higher. Developed International stocks were up 3.7% while Emerging Market stocks lagged with a 1.4% gain as the strong US dollar continues to pose a challenge for foreign investment.
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10-Year Treasury yields trended lower, falling below 2.7% for the first time since April. The yield curve remains inverted with 2-Year Treasuries yielding 2.9%. High yield bonds continued to display positive price momentum with a 1.7% weekly gain and heavy inflows of $4.8 billion.
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Oil prices were up during the week, finishing Friday just above $98 a barrel. US drillers added 9 rigs to the active count, per data from Baker Hughes. US energy giants reaped the rewards of elevated oil prices during the 2nd quarter, with Exxon (XOM) and Chevron (CVX) posting massive, record-setting profits as drivers struggled with higher prices at the pump.
WESTSIDE MARKET STATS:
Santa Monica, CA 90402
This week the median list price for Santa Monica, CA is $3,995,000 with the market action index hovering around 48. This is an increase over last month's market action index of 46. Inventory has decreased to 45.
Market Action Index
This answers “How’s the Market?” by comparing rate of sales versus inventory.
In the last few weeks the market has achieved a relative stasis point in terms of sales to inventory. However, inventory is sufficiently low to keep us in the Seller’s Market zone so watch changes in the MAI. If the market heats up, prices are likely to resume an upward climb.
Los Angeles, CA 90049 - Brentwood
This week the median list price for Los Angeles, CA 90049 - Brentwood is $6,800,000 with the market action index hovering around 40. This is less than last month's market action index of 43. Inventory has decreased to 59.
Market Action Index
This answers “How’s the Market?” by comparing rate of sales versus inventory.
The market has been cooling over time and prices plateaued for a while. Despite the consistent decrease in MAI, we’re in the Seller’s zone. Watch for changes in MAI. If the MAI resumes its climb, prices will likely follow suit. If the MAI drops consistently or falls into the Buyer’s zone, watch for downward pressure on prices.
Pacific Palisades, CA 90272
This week the median list price for Pacific Palisades, CA 90272 is $6,995,000 with the market action index hovering around 43. This is less than last month's market action index of 49. Inventory has increased to 49.
Market Action Index
This answers “How’s the Market?” by comparing rate of sales versus inventory.
The market has been cooling over time and prices have recently flattened. Despite the consistent decrease in Market Action Index (MAI), we’re in a Seller’s Market (where significant demand leaves little inventory available). If the MAI begins to climb, prices will likely follow suit. If the MAI drops consistently or falls into the Buyer’s zone, watch for downward pressure on prices.
Malibu, CA 90265
This week the median list price for Malibu, CA is $7,897,000 with the market action index hovering around 28. This is less than last month's market action index of 29. Inventory has held steady at or around 114.
Market Action Index
This answers “How’s the Market?” by comparing rate of sales versus inventory.
The market has shown some evidence of slowing recently. Both prices and inventory levels are relatively unchanged in recent weeks. Watch the Market Action Index for changes as it can be a leading indicator for price changes.
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