It’s a strange phase in the Los Angeles real estate cycle right now, and as in any economic cycle there are winners and losers. So who are the biggest winners right now?
After the recession homeowners who were forced to sell are still unable to get back into the housing market, either because of credit issues or because they are being priced out of the market by the competition. There is a shortage of inventory, and there are many cash buyers with deep pockets swooping in, especially in the single family housing market. Investors make up a large portion of these cash buyers, and they turning the homes into rental properties, taking advantage of the current shortage. Rental rates are rising and occupancy is high.
If ever there was a time to sell, this is it. With the shortage of inventory, if a home is well-priced, it is going to go into multiple offers and selling quickly, most probably over theasking price. Check out the average days on the market and sold vs list price to understand this sellers’ market. However, the downside here is that if a seller is thinking of selling and buying another home in Los Angeles, then they will put themselves in the pool with all the other buyers competing for the same homes. A seller cannot make their offer contingent on the sale of their own property as it will not be accepted, so unless they don’t have to rely on the sale of their own property to buy then they should think carefully. However, don’t worry about buying at the top of market because you are also selling at the top of the market.
If you are sick of paying someone else’s mortgage and have decided that it makes more sense to buy than lease then be strong and stick with the market. Keep making offers until yours is the successful one. It is all about attitude. Yes it is the top of the market right now, but real estate will always be a good investment, and whenever you buy you will look back and be glad you did. Your alternative is to remain in the ranks below.
Sometimes it just does not make sense to buy. Your rent is so cheap. You love the area in which you live and would not be able to afford to buy there. You don’t have the down payment or your credit is not good. You are nervous about committing yourself to a mortgage. These are all valid reasons not to buy. But, the rental market is a fickle one. Right now rents are on the rise, vacancies are down , and competition is high, making buying a home look more and more attractive. Do the math and see what makes more sense long term.
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