Los Angeles Real Estate Market Update AUG / SEPT 2022
In the beginning of August, mortgage rates dipped below 5% but DID bounce back. While mortgage rates remained volatile due to the tug of war between decades-high inflation and the possibility of a recession, the 30-year fixed-rate mortgage (FRM) dipped below 5% for the first time in nearly 4 months averaging 4.99% for the week ending August 4th. However, mortgage rates were back over 5% and closer to 6% by the end of the month.
While high home prices and rising interest rates depressed housing affordability and in turn dampened demand in the midst of the peak home-buying season, buying opportunities remain in the coming months for those who have been waiting on the sideline as more listings become available, competition continues to cool off although for some more desirable homes, multiple offers and overbids are still common.
Homebuilders’ confidence has deteriorated as buyer demand continued to be diminished by affordability constraints. Despite higher costs for land, labor, and building materials, about 1 in 5 builders in August reported lowering prices by about 5% in the past month in an effort to increase sales or limit cancellations.
New listings began declining year-over-year since June: For-sale properties added to the market were again down 15.8% from one year ago. The ongoing trend suggests that homeowners are less eager to list their homes for sale compared to last year, even though today’s median listing price is more than 7.1% higher. *So, while the market is seeing an improvement in the overall inventory level, the increase is mostly due to a drop in demand rather than an increase in new active listings.
Sale Price - As of August 26th, the median sale price of a home in the City of Los Angeles (3 bedroom) was $1.506M which is a 2% drop from $1.550M at the same time last year but is a 4% rise from the median price of $1.460M last month.
Days on Market - Number of days to sold is also down from 32 to 27 (August 2021 vs August 2022) a 16% drop.
* Inventory - The number of new listings in August (as of Aug 29th) is actually down from 2021. From 667 in August 2021 to 555 in August 2022, a 17% drop.
Source: California Association of Realtors (CAR).