By Bess Hochman
Housing sales in Los Angeles continue to be in a slump, but lack of inventory continues to push prices higher.
In Los Angeles County, the average sale price of a single-family home increased about 11.5 percent over sales prices from April 2014.
Economists are uncertain as to whether home prices will continue to rise. They cite lackluster wage growth as a reason why home prices will not be able to rise much higher. If more people do not list their homes for sale, buyers entering the market will be forced to fight over the slim pickings currently available.
Los Angeles County is experiencing a shortage of housing. In the 1990’s, only one new home or apartment was built for every two new families. This is creating such a small supply that landlords can charge more for rent, and homes can sell for more than the listing price.
The high cost of land, materials, and labor in Southern California means that sale prices of newly constructed homes or condos are out of reach for many prospective buyers. This also means some real estate developers will not be building new homes since it is difficult for them to recoup their building costs.
Condo prices are rising a little slower than prices of single-family homes. The prices of condos are up 8.7 percent over sales prices of April 2014.
Supply of condos are reported down in some areas of Los Angeles. In downtown Los Angeles alone, buyers would need to wait until 2016 in order to be able to live in a newly constructed condominium.
According to CoreLogic DataQuick, the number of both home and condo sales is down. In Los Angeles County, new home sales were down 2.5 percent for the year. Previously owned home sales fell 2 percent and condo sales were down 1 percent compared to last year.
With the population in Los Angeles expected to increase by 30 percent by 2030, it does not appear that this housing market will have sufficient supply to satisfy buyer demand.
After the recent year of sluggish demand, the number of homes sold started to pick up this Spring. The California Assn of Realtors is predicting about a 5 percent increase in the California median home sales price for 2015.
One local real estate tracking source reports that the average price per square foot in the Westwood area of Los Angeles including Century City condominiums is about $825 per square foot, an increase of slightly more than 6 percent year over year.
Gains in jobs and income growth along with current historic low interest rates could fuel demand and put significant upward pressure on prices unless there is a huge jump in inventory this Spring and Summer. However, it is too soon to tell.
Some analysts expected a jump in inventory last year which never materialized.
It remains to be seen whether price appreciation will encourage more people to put their home on the market releasing pent-up supply.
For a free courtesy consultation, or information regarding mortgage brokers, contact Bess Hochman, a top Westside Real Estate Broker for over 20 years. Bess is also distinguished by holding a law degree. This article expresses the opinion of the author. You are advised to consult attorneys and others experts specializing in the issues referenced in this article. Contact Bess by phone at 310.291.4111 or email Bess.CenturyCityNews@yahoo.com.
“Bess is a master negotiator!” says Michael Donaldson, attorney and author of “Negotiating For Dummies.”
