Homes prices in Los Angeles county increased by 8.5% in May 2018 from the same period last year, according to the CoreLogic Home Price Index. This upward trend has been steady since the spring of 2012 as growing employment and an expanding economy have boosted demand amid a below-average supply of homes for sale. March, April and May marked the first time in 3 ½ years that LA county prices posted gains above 8%. The unsold inventory index in May stood at a 3-month supply of housing for sale (a balanced market is around a 7-month supply).
With low inventory, all-time low unemployment, and interest rates for a 30-year fixed mortgage hovering around 4.6%, it’s a good time to be a seller, but a challenging time to be a buyer. “Properly-priced homes or condos, especially in the lower price ranges, typically see offers from multiple buyers and a sale price pushed higher due to intense competition,” said Gary Washburn, president of the Southland Regional Association of Realtors, in a recent report. “No doubt, high prices benefit sellers, but rising prices also shrink the pool of prospective buyers –which translates into smaller and smaller price hikes for homes, and eventually, condominiums.” Ironically, record prices and high demand tempt more buyers to “jump into the market,” perhaps based out of fear that the home buying process will only become more challenging. The trend might change, though, if interest rates move above the 5% threshold, impacting buyers who are already struggling with high prices, according to the report.
The main question for today’s home buyer is how long prices will keep rising? The answer, according to CoreLogic, is for at least another year, although the price of gains will slow.
I’ve represented both buyers and sellers in this market, and while the process can be frustrating for buyers, it does work out in the end. I tell my clients to be patient, persistent, and to remain positive. With the right attitude, the right timing, and the right agent advocating for you – it’s only a matter of time before they’re crossing the threshold of their perfect home!
