In the realm of real estate, housing supply, including the availability of homes for sale, the willingness of homeowners to sell, and the level of buyer demand, are at notably low levels. These metrics have been scraping the bottom since the pre-COVID era and amidst high mortgage rates. These trends suggest an impending shift, where an increase in any of these factors will offer clear insights into the future direction of the housing market.

The spike in mortgage rates, which soared from 3.25% in January 2022 to over 7% by late 2022, has significantly impacted market dynamics. This rapid increase in rates led to a cooling down of what was previously a red-hot housing market. In terms of inventory, there was a notable increase from the beginning of 2022, yet it remained substantially below pre-COVID averages.
Throughout 2023, the housing market has continued to experience subdued demand, largely due to high mortgage rates and a reluctance among homeowners to sell. The inventory has also seen minimal fluctuations, not following the typical seasonal patterns. This stability at low levels indicates a market waiting for a change.

An interesting aspect to consider is the percentage of Californians with mortgages at rates of 5% or lower. This is a significant factor contributing to the reduced number of homeowners selling in the current high-rate environment. The year 2022 saw a decrease in new sellers in the market compared to pre-COVID averages.
As we look ahead, it's anticipated that the economy might slow down in 2024, leading to a shift towards more stable, long-term investments. This could result in a decrease in mortgage rates, subsequently increasing demand and potentially encouraging more homeowners to sell.

The current state of the housing market is characterized by its lowest inventory levels since July, following a significant drop in the last weeks. This trend is expected to continue through the end of the year due to seasonal factors. The inventory levels and the number of new sellers are significantly lower compared to previous years and the pre-COVID averages.
Demand has also decreased, reaching its lowest level in November since records began. This subdued demand is primarily due to the high mortgage rates and a lack of sellers. The trend in mortgage rates will be crucial in determining the direction of buyer demand in the future.
The Expected Market Time, a metric indicating how long it would take to sell all listings at the current buying pace, has decreased slightly, indicating a faster-moving market compared to last year and the pre-COVID average. This trend is evident across various price ranges in the market.
The Expected Market Time, a metric indicating how long it would take to sell all listings at the current buying pace, has decreased slightly, indicating a faster-moving market compared to last year and the pre-COVID average. This trend is evident across various price ranges in the market.