One of the best indicators of a thriving housing market is an increase in home contract signings, which according to the National Association of REALTORS® is at its highest volume in the past 20 months. The association released its pending home sales report March 30 that proves the spring home buying season is rearing to go after sluggish sales in the past few months.
Contract signings increased 3.1 percent to 106.9 in February for its seasonally adjusted pending home sales, which is the highest reading since June 2013. The forward-looking report also found that existing homes sold at an annual pace of 4.88 million in February, which is just below the levels seen the year prior. However, because the job market has been doing so well this past year, housing market experts are confident that this time around the conditions are here to stay.
“What’s different this time is that the surge in the pace of payroll growth means that the pool of prospective homebuyers is now rising more rapidly than at any time since the crash,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
According to RealtyTrac, home prices outpaced wage growth by a 13-to-1 ratio with home prices increasing by a pace of 17 percent since 2012 when the market was at its lowest point. During this same time frame wages only increased by 1.3 percent.
“Those markets with the biggest disconnect between price growth and wage growth during the last two years are most likely to see plateauing home prices in 2015 until wages catch up,” said Daren Blomquist, a vice president at RealtyTrac.
Los Angeles housing market update
The demand for homes in Los Angeles has been on the rise for the past few weeks as inventory levels are low, although slightly higher than conditions reported this time last year. According to Altos Research, a California-based real estate analytics company, there were about 1,721 properties on the market as of March 27. Those properties are coming off the market in an average of 95 days, just slightly higher than the amount of time homes were listed on the market a year prior.
Altos uses a unique figure called the Market Action Index to determine whether trends were in favor of home buyers or sellers using a scale that values 30 as neutral. The index was most recently reported at 43.13 after a couple weeks of inclines as the housing market is looking up with the spring season ahead. In Los Angeles, home sellers have been in the driver’s seat for the past 12 months and it looks like there is no shift in sight.
Home prices are on the rise here as well. Altos reported as of March 27 that the median single-family home value in Los Angeles was $541,303. The seven-day average was much higher as well around $600,000. On a year-over-year basis, the median home value was reported slightly higher for the 90-day average and just slightly less for the seven-day average.
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(all data current as of 6/22/2017)
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