Keller Williams Coastal Properties - Nolan Ross & Company

Navigating a Shifting Market: Rising Inventory and Lower Demand in 2024

By: Nolan Ross Same-Weil, MBA

As we move into 2024, the real estate market is exhibiting some intriguing trends that could have significant implications for both buyers and sellers. According to the National Association of Realtors’ (NAR) chief economist, “The market is at an interesting point with rising inventory and lower demand.” This statement is particularly relevant when examining the recent data from Long Beach and Los Angeles County, as provided by the Pacific West Association of REALTORS®.

Rising Inventory

One of the most notable trends is the increase in inventory. For single-family homes in Long Beach, the number of new listings in January 2024 rose by 25.0% compared to the same month last year. Similarly, the inventory of townhouse-condo homes saw a substantial increase of 24.4% over the same period. This rise in inventory is a critical factor in the market dynamics, as it provides buyers with more options and potentially reduces the competitive pressure to bid higher prices.

Lower Demand

In contrast to the rising inventory, demand appears to be waning. Pending sales for single-family homes dropped by 20.7%, and closed sales decreased by 2.2% in January 2024 compared to January 2023. The townhouse-condo market experienced an even steeper decline in pending sales, which fell by 40.3%. These statistics suggest a cooling off in buyer enthusiasm, which could be influenced by several factors, including economic uncertainty, interest rate changes, or seasonal variations.

Impact on Prices

Despite the shifting dynamics of inventory and demand, prices have shown a mix of stability and minor fluctuations. The median sales price for single-family homes in January 2024 was $877,500, marking a 6.7% increase from the previous year. On the other hand, the median sales price for townhouse-condo homes slightly decreased by 4.3% to $483,500. These price movements reflect the nuanced nature of the market, where different segments may experience varying pressures.

Days on Market

Another important metric to consider is the “days on market until sale,” which indicates how long properties are staying on the market before being sold. For single-family homes, this metric decreased by 35.0%, suggesting that homes are selling faster despite the lower demand. However, for townhouse-condo homes, the days on market increased by 5.0%, indicating a slower pace in that segment.

Market Balance

The months supply of inventory, which measures how long it would take to sell all current listings at the current sales pace, remains a key indicator of market balance. For single-family homes, the supply remained steady at 1.7 months. In contrast, the townhouse-condo market saw a significant increase of 58.8%, rising to 2.7 months. A balanced market typically has about six months of supply, so these figures suggest that the market is still favoring sellers, particularly in the single-family home segment.

Conclusion

The current real estate market is indeed at an interesting juncture. With rising inventory and lower demand, buyers may find themselves with more choices and potentially better negotiating power. Sellers, on the other hand, may need to adjust their expectations and strategies to accommodate the changing market conditions. Keeping an eye on these trends and understanding their implications will be crucial for making informed decisions in the months ahead.

As always, working with a knowledgeable and experienced real estate professional can help navigate these complexities and make the most of the current market dynamics. Whether you are buying or selling, staying informed and adaptable is key to success in the ever-evolving real estate landscape.

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