Construction in California ended 2013 on its highest note yet. According to Real Estate Rama, permits for both single-family and multi-family housing posted year-over-year and month-over-month increases to loosen up the tightened inventory that is driving up prices across the Golden State. Permits increased housing in California by 10,077.
According to Altos Research, a California-based real estate analytics company, the total inventory of homes in Los Angeles continued to fall throughout January, and it ended the year at the lowest point since the start of 2013. As of January 31, there were 1,725 properties on the market.
“Year-to-date totals currently stand at 83,725 units for single-family and multi-family – a 40 percent increase from 2012. To see where the activity will be in the coming months, order the full California Construction Review December report or request a custom report, prepared to meet your specific data requirements,” the publication stated.
The total number of new housing permits in December 2013 was up 49 percent over November, which only had 6,752 building permits issued. The rate was up 57 percent year-over-year when there were only 6,416 building permits issued. Single-family units comprised 3,560 of the total, which is up 45 percent from November and up 36 percent from December 2012.
As of January 31, the Los Angeles real estate market, as reported by Altos Research, sits well within a seller’s market, even though it has trended downward since December. Altos’ Market Action Index measures market conditions to determine whether it favors sellers or buyers with 30 as the neutral value. After peaking near 45 in December, it has since leveled out a bit but still sits at 40.22.
When looking at the median single-family home value, despite the fact the prices rose for much of 2013, they finally started to subside after the start of the year — at the same time when the MAI drifted lower.
What This Means for California Real Estate
As previously stated, inventory is low in Los Angeles and with the busy spring season on the horizon, it’s important that more homes come onto the market. The statuses of the building permits issued in December are unknown, but people looking to buy in the Los Angeles area may be in store for a market that is still competitive. Economists believe the upcoming year will give the real estate market more stability and sustainable growth.
When looking at data from last year’s market, Los Angeles saw quickly rising prices in February that continued to trend upward until peaking above $627k in June. Although prices are expected to rise this year, rapid growth is not anticipated and will help deter quick price drops like Los Angeles saw in September.
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(all data current as of 10/22/2017)
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