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California real estate moves with the stock market more than interest rates. Wealth is enormous in California. Most people don't buy a home with max leverage living paycheck to paycheck. Homebuyers have big incomes and a solid net worth.
Stock gains have been shown to have a tremendous wealth affect that positively impacts consumer behavior in terms of spending but I would be careful speculating that stock gains make CA buyers behave differently. We certainly have one of the largest luxury/super-luxury markets in the world but that's a completely different animal. Jeb and I have both worked the CA market for over 20 years, primarily in what is now the Sub $2M housing market. Stock wealth comes in to play for some buyers but it's a minority for my clients. Most are putting 3-10% down to get into their first home OR rolling over equity on a move up transaction (which becomes sort of it's own feedback loop of higher prices). Thanks for watching and commenting. Appreciate your thoughts!
Glad you found it helpful. Steven and his data are a great resource for California markets and are broadly applicable to most markets. It's great to see them expanding to other states and making their data accessible to additional markets. Happy New Year and thanks for watching.
Q1 will definitely be interesting. January should be relatively calm until we start seeing a continuation of the move lower in inflation starting in February.
🎯 Key Takeaways for quick navigation: 00:00 🏠 *Introduction and Discussion on Interest Rates* - The impact of interest rates on housing affordability, - Mortgage rates dropping by 1.5% recently, improving affordability for millions of Americans. 01:34 📊 *Benefits of Semi-Private MLS Data* - The advantage of utilizing semi-private MLS data for real-time insights into the housing market, - How this data goes beyond closed sales data, providing a forward-looking view of market dynamics. 03:11 📅 *Frequency of Data Compilation* - Data is compiled every week for reports published every other week, - Consistency in data collection provides a clear view of market trends. 05:39 🏡 *Inventory and Impact of Lower Rates* - Discussing the challenge of low housing inventory, - Lower interest rates are expected to increase demand, potentially leading to further inventory shortages in 2024. 09:49 📈 *Housing Market Outlook for 2024* - Anticipating a stronger housing market in 2024 due to lower rates and increased demand, - Addressing affordability concerns and the role of rising incomes in offsetting price increases. 14:59 🌆 *Impact on Different Housing Markets* - Analyzing the Bay Area housing market, particularly San Francisco and San Jose, - The unique factors affecting these markets, including the influence of interest rates. 19:58 🏡 *California Housing Market Overview* - The California housing market faces unique challenges and competition. 20:26 🏘️ *Low Inventory Impact* - Approximately 35% of Orange County's inventory is priced above $2 million, leading to a scarcity of affordable homes. 21:05 💰 *Competitive Market for First-Time Home Buyers* - Homes priced below $1.2 million are highly competitive, making it challenging for first-time buyers. 22:14 🏠 *Inventory Shortages* - Inventory shortages are expected to continue, especially in the $750k-$2 million range. 23:41 📉 *Potential Market Slowdown* - The housing market may slow down in 2024 due to decreased savings rates, increasing credit card debt, and other economic factors. 26:03 🧐 *Seeking Real Estate Data* - Altos Research is recommended as a source for local real estate data, but interpretation is required. 28:53 📈 *2024 Market Forecast* - The 2024 housing market forecast suggests potential economic slowdown, lower interest rates, and increased market activity.
What are you thinking of specifically? Most analysts see continued growth in the low single digits for the foreseeable future. Steven focuses more on the short term (3-12 months) and what the current market activity is saying about near term trends. Thanks for watching!
Hate the groundhog's day of missing home after home again and again in a competitive market. Relieved to grab something Oct '23 under asking with only one other competing offer. Crazytown is just a memory.
Guy is delusional and is not living in reality. Wake up people, mortgage is twice as much as rent for the same house. Don’t let these clowns fool you with their narratives. Oh please.
California never talks why they have such a big economy thanks to federal contracts with the state, NASA, military bases etc and the state is one of the latgest with the biggest population in the USA! More people than the whole country of Canada. That said, put things in perspective!! Big size and huge population. Little Massuchuets has a stronger economy and better colleges and more educated too. California has a lot of racism too .. California is garbage i quickly found out. Go to Michigan! Its ten times better with awesome clean, safe beaches California is garbage i quickly found out. Go to Michigan! Its ten times better with awesome clean, safe beaches😊
And freezing cold winters....I don't think we have to worry about a massive influx of people relocating to Michigan. More importantly, everyone should go where THEY prefer to live. LOTS of great places in the US to own a home and build a life. Thanks for watching!
Every time someone makes the case that people aren't going to let go of their 3% rates they seem to ignore the reality of the eventual forced sellers. I'm not sure if its intentional as they're attention is narrow in scope or if its accidental as people tend to extrapolate near-term past into near-term future. This trend projection works when trends hold but falls apart at inflection points. Right now we sit at near-record lows in unemployment. Historically this is not sustainable and has always seen a quick sharp bounce off the bottom. Really difficult (if not impossible) to anticipate how substantial the bounce will be, when it will be, and how it will impact market participants and of course price action. Kind of illuminates just how futile forecasting is in markets. Similar point could be made on rate forecasts. Consensus belief going into 2024 is rates will trend lower, but consensus view is typically wrong as market is all loaded into the same side of the boat and there is no more marginal buyer to step in. Consensus may be correct in directional movement but magnitude is highly unlikely to play out correctly short of a steep decline in economic output which would likely coincide with substantial layoffs of the kind mentioned above. Historically such drastic, short-term movements in rate cuts and bond market rallies don't occur in short of negatively turbulent economic backdrops. That kind of backdrop doesn't bode well for price action. So one of these outcomes is likely to be incorrect. Either rates won't come down as much as market participants expect, or prices won't incline as much as market participants expect. They're fundamentally inconsistent views. Seems like a classic case of irrational exuberance, bit of a hopium injection into markets really. Thanks for the content though!
If every homeowner who got in trouble simply turned around to rent out their homes in a year where a record number of multifamily is coming online how does that not lead to competition between landlords and ultimately rent cuts as there is a glut of inventory in the rental market? Not sure about national numbers but at least locally rent has flatlined for this reason already, more homeowners seeking to turn into landlords and go rent something else sounds like it will exacerbate this problem. Kind of first order thinking really, because it doesn't follow the logical implications to conclusion. I appreciate the thought, but the thought process just isn't meaningfully there. And any decline in rent prices will just pull back demand from the purchase market and probably add supply as high mortgage investors turn cash flow negative. Market dynamics really do necessitate correction in a weakening macroeconomic backdrop it doesn't make sense to assume that "things are so good that traditional market dynamics can't apply" Might provide a cushion and create a sort of shallower bottom in the event of downward pressure on home prices, and may stall it out into a longer time horizon with slower declines than normal but won't eliminate market correction forces entirely. Would appreciate some push back so the guest had to defend their position more rather than just assuming they're right in their thinking. Healthy debate is good for discussion. EDIT: coming from inland empire btw so still local to California markets.
Forecasting, and expecting to be accurate, is 100% futile and hopefully we expressed that in the video. What we do, and what most people interested in any market should do, is analyze the data. Determine where it is most likely to go based off of the currently known facts. THEN step back and say, if the outcome was much better, or much worse than I am anticipating, what is likely to have caused that. Annie Duke wrote a great book called Thinking In Bets. In the book, she suggest asking anyone who has expressed a strong opinion if they "want to bet?" With this simple question, the person will have to re-think how strongly they believe what they were telling you. They will almost certainly realize they have far less certainty than they imagined. It's a helpful thought exercise for analyzing one's own beliefs, especially related to markets.
Healthy, respectful debate is ALWAYS helpful and always welcome here. A YT comment reply is a tough place to thoughtfully respond to your thoughts on forced sales but there are many evidence based responses that show anyone expecting a large wave of distressed sales to significantly (+10%) pressure prices lower hasn't studied past downturns, how they played out and what impact they had on home prices. I will say this, in relation to your location. Areas like the IE are most likely to be susceptible to downturns in prices. More first time buyers, more young owners who haven't had time to build up equity, greater use of low down payment options. If you are correct, such areas will be the canary in the coal mine and we should all be focusing on the incoming data for potential inflection points. Thanks for watching and commenting. Happy New Year!
@@TheEducatedHomebuyer Appreciate the book recommendation! Reminds me to an extent of Daniel Kahneman's Thinking Fast & Slow. Behavioral Finance is a very intriguing field. Would you be interested in asking this question to your guests in the future? How certain they are of their analysis. Because again he seems to be kind of engaging in first order thinking without always following the points to the logical conclusion (my example was how we can't really logically expect both massive rate cuts to ease and not simultaneously see unemployment spike) Just think your audience (definitely myself) would appreciate a more nuanced discussion rather than letting guests run away with their view unchecked. Could help prevent confirmation bias type thinking. Thanks for your reply!
@@TheEducatedHomebuyer Love the points made! Could you please point me to the historical data you have researched that suggests distressed sales don't necessarily entail downward price pressure? I am eager to learn and study from history. Also, I have been thinking similarly regarding the IE being the potential focal point in the event there is any sort of downturn given its tendency toward volatility during market swings and the nature of buyers in such an area being not quite as qualified as other regions like the OC or SD county. I've also just seen a massive influx of people moving away from neighboring counties like those two into this area which drives prices higher than previous residents can afford, similar to how people leaving California have driven up home prices in more affordable areas beyond affordability for those residents. And I know people talk about a large pullback in building but boy does the IE remind us how local real estate is because its been in a bit of a construction boom as of late by my judgement with a lot of homebuilders buying up huge swaths of land and building large blocks of homes throughout the IE in recent years. Just going to continue monitoring the situation and analyzing data. Thanks for your feedback!
