If you ask agents in the South Bay what’s going on with the market, you get some puzzled looks.
The market that was red hot, all of a sudden is not. And it’s hard to put a finger on what is happening, whether it’s an anomaly or a sign of a downtrend or if we’re just plateauing.
I personally think we’re stuttering, but it may be indicative of a few environmental and economic conditions that may be temporary.
1. The volatility of the stock market was undeniably sobering. Whether people lost money or were just fearful that they were going to lose money, it put a damper on buyer mentality. Buyers may have pulled back, as they do, when they don’t feel flush with cash. As the market settles down, this feeling goes away and buyers may resume their hunger for purchasing real estate.
2. We all know that a great part of the southern California market has been propelled by Chinese money. And as of late, the exchange rate has shifted in favor of the USD. Costing them 10% more, the Chinese buyers seem to have pulled off from their purchasing frenzy… for now. On top of this, and maybe more importantly, the Chinese government has put new caps on the amount of yuan that can be withdrawn outside their country.
3. And finally, it’s hot. I mean it’s really hot. I go so far as saying, it’s “Africa hot”. I believe that the heat wave that has hit Los Angeles and the Beach Cities has an impact on real estate. And why not? We know that horrific winters on the east coast put a halt to the market there. It’s been so hot here in the South Bay… Hermosa, Redondo and Manhattan Beach have been experiencing weather in the high 80s which is normally unheard of at the beach. And people don’t know how to cope with it. There’s very little A/C, very little reprieve. I think to some extent people have actually been beaten by the heat. So there’s little motivation to go shopping for a home when all you want to do is stick your head under the faucet… which is not even kosher in the drought that we’re having.
So we’ll see in the coming months which direction the stock market and the temperature take. And we’ll see if this is just a hiccup or a sign of a slowdown to come.