Los Angeles Real Estate Market Update & 2021 Predictions
Michel Bron / Data from the California Association of Realtors.
While the Los Angeles Real Estate Market in December began to exhibit signs of a seasonal slowdown, housing demand continued to stay above last year’s level as interest rates remained on a downward trend. In the third week of December, rates hit a new all time low, as a 30 year fixed rate mortgage dropped to 2.67% according to Freddie Mac.
The Los Angeles Real estate market had a strong December with home sales usually declining in the weeks leading up to the holidays. Overall home sales in December were up more than 30 percent compared to last year at this time.
Prices are still going up in the more competitive markets of $800-1.5M range with inventory still being the major challenge moving forward. Buyers are still looking to the Valley and outside the city for more space and bang for their buck, driving demand and prices up.
On the investor side, the shares of homes bought by real estate investors was the lowest since 2001 (according to the California Association of Realtors).
More people bought vacation or second homes this year as its share of total sales rose tothe highest level in four years. The flexibility to work from home and the desire to move from the dense city areas motivated homebuyers to relocate.
A bigger share of properties was sold above their asking price in 2020. Over a third (35.5 percent) of homebuyers paid more than what home sellers asked for this year, compared to a quarter (26.7 percent) in 2019. In fact, this year’s level is the highest in seven years.
Low rates, flexibility to work from home drive California home-buying interest to levels not seen since the last decade, C.A.R. reports
New mortgage applications in December were still high and have been running 20%+ above 2019 for 19 of the past 22 weeks.
What Does the 2021 Look Like?
While we don’t have a crystal ball, continued low inventory and low interest rates will likely keep demand high and prices rising.
Forebearance (when the banks allow property owners to delay or lower their mortgage payments) has been extended and foreclosures will likely will take a while to happen and are less likely to affect the real estate market in Los Angeles.
Some people who are having trouble paying their mortgage now have more equity than ever before and may able to sell and walk away with some equity. This will play out over the next couple years, not right away.
Low inventory will likely continue over the next two months or so and start rising again towards the beginning of March.
As the vaccine roll-out continues hopefully more people will become comfortable selling their homes and more inventory will come on the market.
That’s all for now...Happy New Year to all! See you in 2021!