San Pedro Housing Market Recap | Jan ’23

The San Pedro housing market started 2023 strong, similar to the fourth quarter of 2022. Interest rates decreased slightly, helping raise the average sale price slightly from December’s average. See below for all the details, including single-family homes and condos!

Jan ’23 | Residential Avg. Sale Price: $892,939

January experienced a slight increase in the average sale price from $872,465 in December to $892,939.

Although the average sale price increased by almost $20,000 compared to December, it is worth noting that the number of homes sold decreased significantly, with only 25 homes sold. In fact, January ’23 had the fewest homes sold in the last 12 months; the next closest was October ’22, with 35 homes sold. This is definitely something to keep a close eye on as we move further into 2023, as it could indicate a softening market.

Interest rates, shown in red, have started the year lower than December 2022. With the slight decrease in interest rates, January saw days on the market drop to 35 days, down from 43 in December. We are expecting days on market to decrease when/if rates drop or stay consistent. Next, let’s take a look at single-family homes.

Single-Family Homes | Avg. Sale Price: $1,049,948

The average price for a single-family home in San Pedro has increased every month since October ’22.

With January’s average, we can see the 12-month trend line continues to increase. However, it is important to point out that only 16 houses sold in January, which is the fewest in the last 12 months. February should be an interesting month, as it will likely indicate how we will start Spring.

The time it takes to sell a house in San Pedro has been steadily increasing since June ’22, going from just over two weeks to 40 days in January ’23. With the exception of the summer months (June – August), days on market and interest rates have had an almost direct correlation, seeming to only decrease when rates go down or stay somewhat consistent.

The cross-over event between the bars (days on market) and the red line (interest rates) in the graph above may be a sign of market resistance, where buyers decide rates are just too much to justify home prices causing homes to stay on the market. Homes that sit on the market typically start reducing their prices, unless the seller decides to not sell. It seems as though the residential market is starting to become seriously affected by interest rates and the industry’s economic outlook. Next month should be very telling.

Next up, condominiums and townhouses!

Condos & Townhomes | Avg. Sale Price: $613,811

The average sale price for a condo or townhouse in San Pedro increased compared to December ’22.

January’s sale price average for condos and townhouses reversed the downward trend we mentioned in our 2022 Real Estate Market Recap: San Pedro post. With the new average, prices are trending upward slightly, though the number of sales was low with only 9 condos sold.

Surprisingly, the amount of time it takes to sell a condo or townhouse in San Pedro dropped by almost half to start the year – going from 52 days in December to 28 days in January. Though we did expect a slight decrease from December’s average, we certainly did not expect something this drastic. However, we do not anticipate this trend to continue in the following months.

Outlook

Moving forward, we are expecting rates to stay somewhat consistent which should help gain some confidence in the housing market. Keep a close eye on sharp increases in interest rates, as more are scheduled to happen this year according to the FED.

Buyers

Buyers in this market should be negotiating deals, as sellers have lost much of their leverage over the past 12 months. But keep in mind that inventory remains low for ALL of Los Angeles and much of the state. If buying real estate is one of your goals and you were a buyer in the market over the last 2 years but ultimately gave up because of stiff competition from conventional buyers, now is a phenomenal time to be a buyer because of the leverage you have on sellers. In this market, sellers will welcome FHA offers, VA offers, seller credits, repairs, and loan buy-down programs in order to sell you their home.

Sellers

Sellers in this market should be doing everything they can to distinguish their homes from others on the market. Presentation and condition are extremely important, so preparing your home for sale and making sure it looks and functions as best as it can is of vital importance if you want a successful sale. Doing so may result in multiple offers on your property, which would significantly boost your leverage with buyers.

If you’re ready to start your real estate journey, contact us today!