There are numerous elements interacting right now that are shaping the San Fernando Valley and Los Angeles real estate markets. Some key factors include inventory levels, interest rates, government-imposed tariffs, layoffs, wildfires, insurance, and HOA issues. Let’s break down some of this.
For years, it has been a seller’s market with low inventory. Currently, active listings are up 32% year over year, while pending sales have dropped by 30%. This has created a more balanced market for buyers and sellers. Buyers now have more options to choose from, while sellers can still see multiple offers in a short timeframe—provided their property is well-maintained and priced correctly. Homes that have issues, don’t show well, or are overpriced tend to sit on the market and undergo significant price reductions.
Recent wildfires have reportedly taken around 16,000 residences out of the system. Most of those directly affected sought housing close to where they originally lived. The impact on the San Fernando Valley has been marginal, as the closure of the Pacific Coast Highway and Topanga Canyon has increased traffic pressure on the 101 and 405, making commutes between the Valley and West Los Angeles even more challenging.
I have three clients who lost their homes in the Palisades. Two called for referrals to Las Vegas, and one asked for a referral to Boise. From my conversations, it’s clear that staying in Los Angeles and rebuilding isn’t an option for many of those affected. They’d prefer to return to their original homes and lifestyle, but the fire has pushed them to relocate. Two of those clients are also moving their businesses—Los Angeles’s loss.
Right now, the estimate is that two-thirds of those who lost their homes in the Palisades will not rebuild. They don’t have the time or patience to deal with government bureaucracy, permitting, and working with contractors for years. I still know clients who haven’t been able to rebuild from the Woolsey Fire several years ago. This Palisades situation will only add to the backlog and delays in getting things done.
A group of contractors recently approached me about putting together a syndication to buy vacant lots for rebuilding. My recommendation was to truly evaluate the holding costs before committing. The government has stated that it will help expedite permits for private homeowners rebuilding the same configuration of structure, but speculators and contractors will be at the back of the line—meaning it could take many years before they see a return on investment.
Because of costs and government regulatory complexities you can see in the chart building permits are down, even though we are missing millions of needed housing units.
I’ve blogged about tariffs for months, and now we’re feeling the effects. Without diving into the political side, construction costs and building materials are being impacted. We also don’t yet know if new regulations will require improved fire-retardant materials for rebuilding, which could further increase costs.
Insurance has been an issue for years, even before the fires. Insurance companies have been aware of the risks and have either pulled out of high-risk areas or significantly increased premiums. Now, with recent fires and higher construction costs, premiums are rising even further across the region. I always advise clients to check the availability and cost of insurance before buying a property. Homes in high fire or flood zones will face increasing challenges in securing insurance, making them less marketable in the future.
I’ve previously blogged about HOA-related insurance and reserve issues. Many homeowners are now dealing with higher HOA dues and special assessments. Complexes with insufficient insurance or reserves can’t qualify for conventional financing, meaning buyers have to come in with larger down payments and deal with higher interest rates. This has caused some complexes to lose value. Always read HOA documentation carefully and stay informed about what your HOA management is doing.
Interest rates are currently favorable heading into the spring buying season, lower mainly due to instability in the financial markets. Markets thrive on clarity, and right now, there’s a lot of uncertainty regarding government policies and geopolitical events. Will the short-term pain of layoffs and tariffs lead to long-term benefits as the administration is conveying? Time will tell. If the federal debt can be reduced so that debt servicing and interest costs decrease, long-term interest rates could improve. However, if these policies trigger a recession, rates may drop, but that won’t necessarily be positive for real estate—buyers may lose confidence in making big-ticket purchases. That said, substantially lower rates will bring more buyers into the market, and motivate some sellers locked into super low mortgage rates to make a move.
Due to supply and demand dynamics, home prices should remain stable, but there are many complex factors at play. The market is shifting, and staying informed is more crucial than ever.
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 – Southland Regional Association of Realtors (2025)
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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