CURRENT FORECAST OF LA HOUSING MARKET
Houses for sale in Los Angeles County in short supply and new residential development is not keeping pace. Zillow has forecast house prices in Los Angeles to rise throughout 2018 while CAR shows it moderating. Keep in mind that a lot depends on the political climate and interest rates. Also, only 30% of Californians own a home, so there are many who want to get into the market, especially first time home buyers. The problem is that homeowners don’t want to sell, and inventory still remains tight.
The Telling Stats about LA’s Forecast
It still continues to be a seller’s market and experts say that prices will continue to be strong. Although September sales were slower, prices for homes and condos are up $24k to $30k from one year ago. Some facts maintaining strong numbers, include
Employment very good and rising (LA finally recovered all jobs lost during recession)
General Federal easing of real estate development expected
it will take some time for mortgage rates to rise
Inventory remains tight and there isn’t enough housing to house LA’s growing population (recession)
Many feel that housing developers need to increase pace of building homes to house the CA population. Some say that homes prices will continue to rise but others have doubt with all the external factors including the instability of the political client with North Korea, NAFTA cancellation looming, skyrocketing home prices and people talking about a bubble. Affordability is also dropping though and only 30% of LA county residents own a home. The high housing costs in the coastal California areas however may prevent many skilled workers from migrating to LA to work.
According to LA Curbed’s list of hot zip codes, 90012 is leading the charge (micro-hoods include: Chinatown, the Civic Center, parts of Arts District and Bunker Hill, and most of Little Tokyo.
Here’s the LA Times hot zip code list:
Santa Monica 90402 – Average home price: $3,237,500
Hermosa Beach 9025 – Average home price: $1,693,500
Marina Del Rey 90292 – Average home price: $2,157,500 +23%
Manhattan Beach 90266 – Average home price: $2,100,000 +10%
Playa Del Rey 90293 – Average home price: $1,517,500 +26.5%
Toluca Lake Studio City 91602 – Average home price: $1,022,500
Factors Affecting House Prices and Availability in LA
1. Housing Demand – High overall demand – “all cash bidding wars” in some cases
2. Housing Supply – There’s no inventory
3. Mortgage Rates – Still low
4. Down Payment and mortgage rules – Banks are withdrawing FHA loans however some are offering downpayments as low as 3%
5. Buyer Income – low and not rising much
6. Home Prices – High and rising – out of reach for many buyers – many consider LA homes grossly over-priced
7. New Home Construction: slow (100k to 140k per year)
8. Economic-Foreign Trade – Trump expected to reduce US deficit
9. Political Uncertainty – Voters uncertain of what Trump will create
10.Taxes on Sale of Home – Tax situation is great for sellers
For more info, check out:
https://la.curbed.com/la-market-reports