Supply and Demand is a basic economic fundamental. We all know in the present real estate market any well-priced listing in the Los Angeles region, in all price ranges, will have multiple offers to purchase it.
Without getting into the causes of the market issues during the Great Recession in the 2008 timeframe, let’s compare the inventory levels during that market and the one we have now.
Presently we only have around 1200 active units for sale. Back in 2007 we had 12,000 units on the market. That’s literally 10 times the amount we have today.
The reason for the supply being out of balance is the inadequate quantity of housing construction over the past several decades.
This will not turn around any time soon. Because of Red Tape in Los Angeles, it takes at least 5 years to begin any construction, along with excessive development costs. A new large housing development in Santa Clarita has been held up for 20 years. They were approved a few times, then had to jump through another hoop. There is at least $125,000 per unit in permit costs, environmental reports, Linkage Fees, etc. Many developers have left California to build housing in other states, where it’s easier to function.
The result will be the housing affordability/availability issues will not be resolved until the supply and demand equation is more in balance. Sacramento has legislation being debated that would override local zoning to force new development. That’s not going to go over well with homeowners and constituents that want to keep neighborhoods the way they’ve been in the past (That story be beyond the scope of this blog).
If you are in the Los Angeles area, 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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