Turning Up the Heat

The housing market will soon heat up as a result of an increase in demand and a decrease in market times now that the holidays are behind us and all of the other potential distractions have been cleared away.

The Winter Market

The Winter Market is identified by slowly increasing supply, soaring demand, and a decline in market times.

It can be difficult to get into a car in the thick of winter. The chairs are chilly. It's freezing behind the wheel. Most significantly, even in sunny Southern California, the air feels as though it is below zero. When you first put on the heat, chilly air comes out of the vents. After moving down the street, the temperature immediately begins to warm, putting an end to the chilly realities of winter. Similar to how housing quickly warms up and shifts to the winter market, where demand soars higher, the supply slowly expands, and market times shorten, after striking its slowest period of the year throughout the holiday market.

Los Angeles Winter Market

The 3-year average inventory grew from 10,632 to 10,983 homes, up a meager 3%, or 351 additional homes. Demand shot up from 3,663 to 5,461 pending sales, up a substantial 49%, or 1,798 additional pending sales. The 3-year average Expected Market Time dropped from 90 to 61 days, shedding 29 days over the course of the Winter Market.

Supply and Demand

The active listing inventory rose by 282 properties in the last two weeks, or 4%, to reach 8,189 homes, which ranks third-lowest in mid-January behind the epidemic years of 2021 and 2022. In December, there were 817 fewer houses listed for sale, a 23% decrease over the 3-year average prior to COVID (2017 to 2019). 5,059 houses were on the market last year, which is a decrease of 3,130 houses or 38%. Prior to COVID (2017 to 2019), the 3-year average was 10,208, or 25% greater. Demand, based on the number of pending sales compared to the previous month, fell by 56 pending sales in the last two weeks, or 2%, to reach 2,269, which is the lowest level seen since tracking started in 2012. 3,637 pending sales were active last year, which is 60% greater than it is now. Prior to COVID (2017 to 2019), the 3-year average was 3,478, or 53% greater.

Luxury End

The luxury market has improved over the past couple of weeks.

The Expected Market Time for properties valued between $2 million and $3 million climbed from 170 to 223 days during the past few weeks. The Expected Market Time for properties valued between $3 million and $4 million increased from 231 to 289 days. The Expected Market Time for properties ranging between $4 million and $8 million grew from 347 to 434 days. The Expected Market Time climbed from 521 to 766 days for houses priced over $8 million. A seller might be considering putting their house into escrow around February 2025 at 766 days.