While the traditional housing market in Southern California has suffered tremendously this season under a limited amount of homes for sale, things look to be improving as a healthier outlook on the market by home builders may spur an influx of new home developments in the coming months. According to the National Association of Home Builders, the confidence among home builders throughout the nation has climbed to its highest point in September in nine years.
The index, which is calibrated monthly by the association, rose for the fourth straight month to 59. This is the highest level the index has been at since November 2009, when the recession was just beginning to take hold and filter down to all areas of the national economy. The value is also now firmly in what is considered the positive region of the index, as anything over 50 is considered as having a good outlook on the future of housing and the economy.
While the national housing situation continues to work its way up and down throughout the year, the driving factor that may have made these tepid feelings warmer over the last few months could likely be the improving job market.
“While a firming job market is helping to unleash pent-up demand for new homes and contributing to a gradual, upward trend in builder confidence, we are still not seeing much activity from first-time home buyers,” said NAHB Chief Economist David Crowe. “Other factors impeding the pace of the housing recovery include persistently tight credit conditions for consumers and rising costs for materials, lots and labor.”
Los Angeles Real Estate Market Still Looking for Increase In Inventory
While it remains to be seen if the increase in confidence will truly result in more building projects for Southern California home builders, market watchers remain hopeful that inventory will come to the Los Angeles home market. According to Altos Research, a California-based real estate analytics company, inventory has yet to recover this season, leaving many potential home buyers out in the cold as fall approaches.
Altos reports that as of September 12, there are about 2,050 properties on the market in Los Angeles. This is a slight increase from a few months ago when inventory dipped below 1,600 properties but is still not enough to allow for serious moves to be made by home buyers.
Favor remains in the hands of Los Angeles home owners looking to sell as indicated by the Market Action Index, a value unique to Altos that measures buyer demand against inventory levels. With an above-neutral value of 39.70, Altos indicates that there are a vast amount more buyers than homes on the market, which is giving sellers the power to ask for more money for their highly desired homes.
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