The housing market in Los Angeles is experiencing a remarkable upswing in 2023, with all primary housing price indexes indicating strong appreciation. This surge is attributed to various factors, including constrained housing inventory and a recovery from the market bottom in November 2022. In this blog, we will explore the different housing price indexes and delve into the reasons behind the positive trend in Los Angeles’ residential real estate market.
Understanding the Housing Price Indexes: Several housing price indexes provide valuable insights into the real estate market’s performance. Each index adopts a unique approach to gather and interpret data.
- FHFA (Federal Housing Finance Agency): The FHFA relies on data exclusively from Freddie Mac and Fannie Mae, primarily based on Conforming loans. While this index offers a glimpse into the housing market, it may not capture the complete picture due to its limited data sources.
- Case-Shiller Index: Considered more accurate than the FHFA, the Case-Shiller Index calculates data based on repeat sales of single-family homes. However, it is a lagging indicator, as its results are typically a month behind other indexes.
Current Market Status: As emphasized in previous blogs, the residential real estate market in Los Angeles reached its lowest point around November 2022. Despite year-over-year figures indicating relatively lower values, the truth lies in the month-to-month appreciation observed since the beginning of this year.
Projected Appreciation in 2023: All housing price indexes forecast significant year-end appreciation figures ranging from 5% to 10% nationally. The Los Angeles region is expected to experience appreciation closer to the high end of this range, mainly due to the limited housing inventory.
Impact of Constrained Housing Inventory: The constrained housing inventory in Los Angeles plays a crucial role in driving the surge in housing prices. With fewer properties available on the market, the demand for existing homes intensifies, resulting in higher competition and increased prices.
The Los Angeles residential real estate market is witnessing a robust appreciation in housing prices throughout 2023. While various housing price indexes offer different perspectives, they collectively indicate a positive trend in the market. The limited housing inventory in the region further amplifies this trend, with year-end appreciation projected to reach the higher end of the national range, demonstrating the enduring strength of the Los Angeles housing market. As the year progresses, it will be intriguing to see how these factors continue to influence the real estate landscape in the city.
If you are in the Los Angeles area, and have any questions or real estate sales or financing needs, feel free in contacting me
Ron Henderson GRI, SRES, SFR, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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