In Southern California, like in the rest of the nation, home building is at historic lows, keeping inventory of available homes for sale razor thin and home prices ever-increasing. The real estate market in Southern California has shifted because of this, with investors heading into offers with cash in hand and sellers sticking to the sidelines because they aren’t sure of the stability of the market. The Los Angeles Times reported that despite the high demand for homes in Southern California, home builders still aren’t jumping on the opportunity for a number of reasons.
According to the report by the L.A.Times: “That may seem like an ideal opening for builders to put up new developments. But Southern California’s supply of new homes had dwindled to about 2,200 at the end of last year, compared with a peak of about 19,000 in 2006, when the housing market started to collapse, according to the Real Estate Research Council of Southern California at Cal Poly Pomona.”
The report went on to say that an estimated 15,000 new homes will be sold this year in the region, which is 58 percent less than the 20-year average.
Altos Research, a California-based real estate analytics company, reported that inventory in Los Angeles is currently at its lowest point in the past year, or for as long as Altos has available data. As of February 28, there were 1,633 properties on the market, down from a year-high of roughly 3,500.
Another factor keeping inventory down is that only about 10 percent of today’s new projects are attached condominiums, compared to about half in previous expansions. Building single-family homes is much less risky for home builders, but condominium projects add more units to the supply of inventory. Because there is a shortage of available, ready-to-build lots, it could take some time for the appropriate amount of inventory to come back into the Southern California market.
Demand for Homes in Los Angeles
With inventory at an incredibly low level, it’s no surprise that demand is high for homes in Los Angeles. According to Altos’ Market Action Index, which measures the conditions to determine whether a market leans toward buyers or sellers with 30 as the neutral value, Los Angeles was marked at 39.57 as of February 28. Even being in the slow season for the real estate market, demand still outweighs supply and favors home sellers. The index has been above the 30 mark for all of 2013, dipping to its lowest point of about 34.5 only briefly in September.
The low inventory is also keeping prices up, but as fewer people are entering the market due to the small pool of supply, prices aren’t creeping up too high. Altos reported the median single-family home value is at $481,242, which is down from its peak near $600,000 around August.
We’re a luxury real estate company that specializes in exquisite properties throughout Southern California. Please contact us so that we may assist you with your luxury real estate needs.
Consider These Los Angeles Luxury Homes for Sale from $2,000,000 to $4,000,000
$2,995,000 : 10537 CUSHDON Avenue, Los Angeles5 beds, 3 baths
$2,278,000 : 2437 N EDGEMONT Street, Los Angeles3 beds, 4 baths
$2,975,000 : 12424 W SUNSET, Los Angeles4 beds, 4 baths
$3,195,000 : 1723 S DURANGO Avenue, Los Angeles5 beds, 5 baths
$2,149,000 : 1855 REDCLIFF Street, Los Angeles3 beds, 3 baths
See all City of Los Angeles Luxury Homes For Sale.
(all data current as of 10/22/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.