Jonathan Lansner, business columnist for the Southern California News Group, has an interesting take on the housing market. He points out in a January 7 article in the Union-Tribune that the market has crashed. What? I had to do a double take. As I have mentioned in earlier posts, statewide sales are down but prices are up. Crash? Huh? As I kept reading his piece I see he is talking about sales crashing not prices. This is an interesting take in that many of my possible buyers are waiting on the sidelines because they think the market will crash like it did in 2008. As I have said over and over, the financial fundamentals are different than they were in the early to mid 2000s with the big difference currently being that banks aren't giving away money to just anyone with a pulse. Per Lansner, our current crash "was the result of a 42 percent, two-year drop in sales. The main culprit was the Federal Reserve, which rapidly boosted mortgage rates from historic lows to battle inflation." I am nodding my head as I read that.
So is was 2023 the bottom of our "crash." Lansner thinks so. He reviews various home buying metrics and economic factors statewide and some of the numbers he shares are interesting if not astonishing. The entire article is worth a read. One point he makes which I find interesting is that when you look at the last three home buying "crashes" 2023 had the lowest sales per capita. In 1991 the low equaled 10 homes sold per thousand California residents. In 2007 the bottom was 8 per thousand. In 2023 sales were 6.6 per thousand. How can it get any slower? Lansner predicts the number of sales will pick up in 2024. He has put together an online quiz at bit.ly/salesrebound24 if you want to see how bullish you are on an increase in sales. I agree with Lansner and think we may have had our market crash, it just looks different than it did in 2008.