Los Angeles Housing Market Update - JULY 2023
Happy 4th of July!
Tight supply continues to put a drag on the Los Angeles market, resulting in fewer sales, high home prices, and low housing affordability. With rates remaining high relative to levels observed between 2010 and 2021, housing inventory in the resale market will remain low as long as the lock-in effect continues to prevent potential home sellers from putting their homes up on the market.
The state housing market bounced back in May after sales dipped back-to-back in March and April. Sales of existing homes in California surged nearly 10% monthly and recorded the highest level in eight months. Despite the month-to-month gain, home sales continued to decline by double-digits from the same month of last year. The year-over-year drop in sales was relatively mild compared to recent months and was the lowest yearly decline since June 2022. Generally, a balanced market will lie somewhere between four and six months of supply. Inventory is calculated monthly by taking a count of the number of active listings and pending sales on the last day of the month. If an inventory is rising, there is less pressure for home prices to increase. With 2.2 months of supply left, it is still short of what economists say is needed for a balanced market. Hence, the Los Angeles County housing market will continue to see upward pressure on home prices. Meanwhile, the housing supply shortage creates an opportunity for developers and residential constructions have been rising in recent months as a result.
After the initial increase in the run-up to the debt ceiling debate, rates have hovered in the high-6% range and remained there in the wake of the Fed’s decision not to raise their target interest rate at their June FOMC meeting; making June the least volatile month in well over a year.
Our Take - Although we are not seeing the multiple offer price wars like during the pandemic, there is still demand out there and multiple offers are still common. Although Sellers may experience this demand, many buyers are still not willing to go higher than the initial offering price.
Source: California Association of Realtors & Norada Estates