2 minute read
Los Angeles Housing Market
By Success Money
Similar to all other parts of the country, the housing market in Los Angeles is currently experiencing a boom. A strong comeback from the pandemic stall. Buyers motivated by low interest rates are entering the housing market with the hope of fulfilling their American dream of owning a home. And they are especially drawn to what L.A. has to offer, from the glitz of the entertainment world to the cultural diversity it has.
The demand is, however, higher than what the market is currently supplying. As a result of this increased demand and inventory scarcity, prices in L. A’s housing market have appreciated dramatically. It is, therefore, no surprise that this is, in turn, affecting affordability. Those able to afford a home have to pay well over the asking price, while those unable to are exiting the market.
SALES
Median Sale Prices in all the six Southern California regions have experienced a 33.1% increase this May, compared to the same time last year. The double-digit price growth across the region can be accounted for by the rise in the sale of single-family homes. Los Angeles had a massive 80.7% year-over-year increase. In L.A., as of May, the median sale price was
$725,680, a 1.0% increase in MTM and 31% YOY. The sales, despite the rise, slowed in April by -5.2% and in May -3.2%. Experts, however, feel the drop was only temporary, and sales will pick up in June when 3,035 homes sold. A significant increase from last year’s 1,647 sales in June.
DEMAND AND SUPPLY
Mortgages might have made debt more affordable and attracted buyers but failed in encouraging homeowners to list their homes on the market. The uncertainty created by the pandemic makes them cling to their homes. As a result, the inventory in L.A. is currently very tight. The supply and demand dynamics have led to price appreciation. Home affordability has been affected in light of these prices, as seen in April when sales were down as people left the market. For homebuyers still in the market, this departure of some spells an easier time for them when getting their offers accepted.
PRICES
As of June 2021, home prices in Los Angeles appreciated by 24.8%, according to Redfin.com. The current median sale price for homes in Los Angeles is currently $950,000. The sale-to-list price ratio for homes was 101.42. Therefore, homes sold for 1.42% over the asking price. They are signaling that the housing market in L.A. is a sellers’ market. That means that a lot more people are looking to buy homes than the homes available. Experts anticipate that unless the supply is somehow increased, L. A. will continue to appreciate further up.
FORECASTS
As more people get the vaccine, people are going to go back to working at the office. The COVID-19 pandemic saw people work from home, seeing occupancy in rental apartments drop significantly at -18%. But recently, more people are moving back to the city, and several entertainment companies are reopening; studio apartments and one-bedroom units are starting to fill up. The rent is also notably lower this year than last year, with a one-bedroom in May previous year renting at $2,250 and this year going for $1,970.
Sources:
https://www.noradarealestate.com/blog/los-angeles-real-estate-market/ https://www.redfin.com/city/11203/CA/Los-Angeles/housing-market https://www.realtor.com/realestateandhomes-search/Los-Angeles_CA/overview https://www.northcoastfinancialinc.com/5-major-mistakes-to-avoid-when-flippinghouses/
