I feel like writing a song: “Los Angeles real estate, something’s in the air”. It has a nice ring to it.
I really can’t get a handle on what is going on in the market right now. Each Los Angeles neighborhood is different and each price range is different. I do think that the craziness of the past couple of years has settled down and may be over. The days of lines around the block to visit an open house are over. One I recollect received 27 multiple offers and sold $200,000 over asking – an example of what was going on a couple of years ago.
I recently put a lovely, moderate, well-priced home on the market in a very highly desirable area with barely any inventory. It is in the process of selling after being on the market for less than a week, but I received few inquiries about it. Extremely unusual, even at the slowest of times.
Even with the shortage of inventory in many neighborhoods, affordability is a factor. This article by First Tuesday on the California housing market, offers good insight into the current Los Angeles real estate market where home prices have been moving way ahead of incomes. At some point buyers are just not going to be able to keep up and we have probably reached that point, especially in the lower and moderately-priced market where prices have increased at a greater percentage rate. There are few if no deals for investors these days so that market is drying up, a good thing, since speculation is part of the reason for these kinds of market increases.
Although still historically low, when mortgage interest rates creep up, as they have done over the past week, affordability drops. Even a fraction of a percentage point could affect the ability of a buyer to qualify for or be comfortable with their monthly payment.
These are all reasons why the market is slowing, but affordability has been a factor for a while now and that didn’t stop multiple offers. There still is not enough housing in Los Angeles, so when something good comes on the market in a sought-after neighborhood, you would think there would be a few buyers who can still afford the home. It would seem that those buyers out there who can afford to buy are being way more picky than in the past and are less desperate. Maybe they know something we don’t and are waiting for prices to completely stabilize or even drop a little.
It will be interesting to see where the Los Angeles real estate market settles in 2017. I’m rooting for the calming influence of stability.
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