Welcome to the Monthly Market Update for January 2020! As you all are aware: the market data for each month is not released until the end of the subsequent month, so here we are taking a look at how the year is starting off – and I’ve got to say things are looking like they will become even hotter than they are!
If you’re looking for some background information on this series take a look at the last Monthly Market Update here, otherwise let’s jump right in:
In January we saw our seasonal trends remain consistent, however, we saw some interesting shifts in some of the key performance indicators that we follow.
Traditionally January marks the beginning of the return of inventory to the market, as December is one of the scarcest months we experience. This year, however, inventory does not appear to be coming back as strongly as in the past. We observed an increase in listings of only 2.9% from December ’19 to January ’20, a stark contrast to the 8.7% increase we experienced from the same time period last year (December ’18 to January ’19).
Keeping with tradition we did observe our seasonal uptick in Months of Inventory (MOI), but again it was not as large as historically expected. From Dec ’18 to Jan ’19 we saw MOI shift from 2.9 to 4.1, and from Dec ’19 to Jan ’20 we saw it only shift from 1.7 to 2.3. Bear in mind this means that in January 2019, if no new listings were put on the market, all listings would be sold in 4.1 months. BUT in January 2020 they would all sell in just 2.3 months – that’s almost half the time! Digging a little deeper we find that 2.3 is actually the lowest January MOI we’ve seen in over 5 years!
Now I know what you’re thinking! “Cool John, sounds great, but what are the actual numbers behind these so-called metrics!” If you just calm down for a few seconds you’d realize I’m trying to share them with you right now!
Alright, here’s what you need to know: Jan ’19 -> 2,106 properties sold, Jan ’20 ->2,501 properties sold, but wait it gets better. In January 2019 we had 8,639 listings on the market, fast forward to January 2020 and we only had 5,786 listings!
So, what does this mean and what can we expect? As a result of the tight supply and steady (if not increasing) demand we saw the median sold price creep up from $585k to $620k year-over-year – which would mean a 5.98% appreciation for Los Angeles County. In an effort to disprove this figure I ran the numbers for the current quarter sales over the same quarter last year and that suggested an annual appreciation rate of 6.3%.
As for the future of the market, if you mix everything I’ve said above with the incredibly low interest rates we’re seeing right now it strongly suggests prices are going up in 2020. In fact I feel there’s only one expression that could aptly describe our housing market: All Gas, No Brakes!