OFF THE CHARTS
When compiling year-over-year statistics, economists tend to work in single-digit percentages. For example, the U.S. GDP growth over the past few years has bounced between 2% and 3%. People start to panic when inflation goes over 5%. Most investors would agree that the stock market has had a fantastic run in recent years with the S&P 500 growing by about 8% per year. If you are fortunate enough to have a 401K, you would be delighted if it averaged 9% growth over the years. These are normal numbers that people are accustomed to digesting.
What we’ve seen in 2021 for home sales in Laguna Beach is not normal. It was not even unusually strong. “Unprecedented,” a word we have heard over and over again during these past 18 months doesn’t come close to putting it into perspective. It’s a once-in-a-lifetime phenomenon. Before you look at the comparison below, keep in mind that 2020 was a robust year for home sales, but here you go:
2020 2021 % Change
Units Sold 149 290 95%
Average Price* $2,757 $3,462 26%
Median Price* $1,995 $2,593 30%
Average $/Foot $1,045 $1,380 32%
Median $/Foot $959 $1,239 29%
Avg. Days to Sell 147 76 -49%
Med. Days to Sell 73 25 -66%
Total Sales* $419,820 $1,003,967 144%
It seems impossible that the volume of real estate transactions would nearly triple from one year to the next, but that is what we just experienced. There seem to be three major factors driving this behavior: 1) low interest rates; 2) the tectonic shift of being able to work from home, and; 3) the greatest transfer of wealth in history.
If you are a homeowner in Laguna Beach, congratulations; If you started out in 2020 with a home worth $2 million, your net worth just increased by $600,000 without lifting a finger. The flip side of that coin is that buyers simply have to accept the current realities and pay what the market dictates…or (sadly) live somewhere else. That is a tough pill to swallow.
At Cove Canyon Realty, we love to delve into the statistics and collaborate on winning strategies in real estate. Please consider us when you have any real estate needs.