Is it a buyer’s or Seller’s market for housing? It depends, but it’s more balanced than it has been for a while.
A real estate market is always based on locality, supply, and demand. On a national level there are areas in the South where there’s plenty of land available, and less regulatory elements to deal with, so there will be prices soften as builders have been able to build a lot of new housing tracts over the past few years. For new housing, the Los Angeles region has less available land to develop, skilled labor limitations, material shortages and regulatory/permit/environmental/zoning costs (financial and time). There’s a fair amount of new housing being built in the Valincia Santa Clarita area, but it took over 20 years to get the construction approved.
Most of what’s being built in the Los Angeles City region are new apartment buildings that received priority with expedited and bonus density approval. Within the next year or so we should see lower rents for apartments as the construction come online.
More resale inventory is coming to the market. The higher interest rates are a burden, but properties priced well can still sell fast with multiple offers. Mainly in the lower price ranges. Higher end properties $2M+ or overpriced properties are sitting and getting large price reductions.
I’ve blogged on it before but be careful when dealing with HOAs. Are there adequate reserves? When was the last time the master insurance policy renewed? Have the balconies (if applicable) been inspected or need code updates? I’m seeing a lot of issues out there that can impede a sales transaction or be an economic burden to an owner.
The Federal Reserve is leaning on moving forward with rate cuts. They’re admitting that inflation is easing, but not committing to cutting. Shortly after this blog posting the June CPI will be released, and upcoming employment numbers may allow the Fed to make a move in September. Remember the Fed Funds rate only affects short term interest rates. The longer-term rates and Mortgage-Backed Securities are influenced by the financial markets. If the market perceives the Fed is to early lowering rates and inflation can go up, mortgage rates can go up even when the Fed lowers their rate.
Two other areas influencing mortgage rates 1) the Fed is slowing the liquidation of their balance sheet (good for rates) 2) the Federal, States, International debt adds more competition for the Mortgage-Backed Securities and pushes up the rates.
There are always reasons to sell. The lock-in effect of existing owners with the artificially low 3% mortgage rates from the pandemic is keeping many potential sellers from making a move. Owners are staying put for 12 years before selling. Historically it’s been 7 years. Looking forward to when 30 year fixed rates are back in the 5’s. It’ll be a while…
If you are in the Los Angeles area, and have any questions or real estate sales or financing needs, feel free to contact me
Ron Henderson GRI, SRES, SFR, RECS, CIAS, CREN, GREEN
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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