It seems that every week I receive a question on if we’re going to have a crash in real estate values. My answer is always “it’s about the basic economic reality of Supply and Demand”. Interest rates can go up putting pressure on marginal buyers, but higher rates, higher values, isn’t what you want to look at for a change in the real estate market… it’s the inventory level. We’re presently around 30 days of inventory. Historically it’s around 6 months.
The Millennials are hitting prime buying time, and the Boomers aren’t selling. New housing developers have a hard time constructing new housing tracts because of gov’t constraints (years for approvals, and tax/permit costs). Skilled labor is hard to come by, and building materials can be limited because of supply chain issues. Unlike the 1980s and 90’s, building has been limited. It takes a long time to ramp up housing unit construction. Both resale and new unit inventory are minimal.
Note the chart of residential inventory for the San Fernando Valley. In January 2022 there are only 1,122 active units. Compare that to 2009 when it was 13,500. If you want a true indication of when the market changes, follow the trend of the active inventory… or just follow my blogs, as I’ll watch it for you.
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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