Information About the Market

My observations:

As the new year begins rates could not be lower. Anyone who can refinance should. In January Covid numbers spiked in Southern California which again shut down a lot of commerce. No indoor or outdoor dining yet Target and Walmart were fine places to shop all along. The rules have made very little sense from the beginning and contributed to the uncertainty. Commercial real estate is reeling, restaurants and small businesses are closing forever. The good news is with the vaccines here and getting distributed we may see more normal activity come summer.

A year of unknown with most things, including real estate. It started off well with low interest rates being a factor but inventory again not as large as one would like. Then in March Covid made itself known and the market went into a deep freeze. Stay-at-home orders shut Southern California down. You were no longer allowed to have an open house, everyone was working virtually and the level of transactions went to the minimum. Spring, which is normally a “selling season,” was blank. By summer incredibly low interest rates and pent up demand gave the market a push but still all manner of doing business had changed - every showing was by appointment, Covid disclosures were the norm and there was a level of anxiety that had never been present before. Prices, especially on the luxury end, remained very high and the demand was strong in spite of new numbers that indicated for the first time people were moving away from California to places like Utah, Texas, Nevada and Oregon. The lower end is being squeezed while the higher end flourished. With our new “adoption of virtual life,” location has taken on a different meaning. Will virtual work life forever change how we decide where to live?

The market was brisk with well-priced homes selling easily. Lower interest rates contributed to the desire to buy a new home. The major issues were inventory, which was low, and overall prices, which were high, and continue to price new buyers out of the market in Southern California. At the end of the year major wildfires including the huge Woolsey Fire and the smaller Pacific Palisades Fire had a chilling effect on lives and real estate in SoCal. Living in beautiful and wooded canyons has always been highly desirable in Southern California but it comes with some issues and risks which also needs to be evaluated before buying. As an owner it is imperative you have the proper amount of fire insurance and a good evacuation plan. Check it yearly!

The real estate market in Southern California has found new highs in 2018 in terms of price, especially in the 90210 and 90077 zip codes. Many of these sales have come from all cash transactions. Where there is a loan, low interest rates have allowed people to afford more of a home. Still income needs to justify the loan as the banking restrictions are as tough as ever and interest rates are climbing. A lack of inventory in the first half of 2018 pushed prices but that seems to have lessened as we enter the third quarter. The high-end spec market has been active for years now which means there is a wide array of spec houses competing for those high-end buyers. This also puts some downward price pressure on houses that do not have the latest updates. The new property tax rule may have some impact in 2019 on more inventory coming to market since a good part of the tax deduction has gone away for higher priced homes. Southern California, especially Los Angeles, has been deemed a “global buy destination” for those wanting to diversify their real estate holdings.

Prices continue to push the upper limits and the Los Angeles real estate market is strong. Good inventory is on the decline making it more competitive than ever to close a transaction. Many deals are still "all cash" as bank loans have become increasing difficult to obtain with the banks being "income centric" as opposed to "asset centric." Dodd-Frank has had a chilling effect on lending. All the more reason to find professionals that can help you with the financing you require. Investors are also using Air B&B and VRBO to help fill their properties with short-term and perhaps more lucrative tenants. A property that would at one time come onto the market is now being rented out by owners using short-term rentals. This is practice is being effected by local ordinances and it is wise to check out the restrictions before investing.

The Los Angeles market continues to roar along. Rents to are heading higher. Investors seems to undaunted by the high prices and still find Los Angeles to be a good place to invest in real estate. There is pressure from China and greater Asia for property in the US and Los Angeles is close to the top of the list of possible places to invest. Many high-end spec homes that have been years in the making are coming to market putting some pressure on older existing inventory.

The Los Angeles market has really taken off and continues to fly high in 2015. Low interest rates and a continually upward motion to the market has investors and speculators sending many properties into overbid. The “all cash” deal is ever present, making those that need to buy with a loan at a distinct disadvantage. Rentals too have seen a dramatic increase in Los Angeles with affordable housing becoming more and more limited. The question remains what happens when interest rates rise? Is this another bubble just waiting to burst or is the demand for housing and investing in Los Angeles so great, especially with the increase interest from Asian and European buyers, that the pull back, when there is one, will be minimal?

So far in 2014 the larger market seems to be taking stock of the run-up from 2013. The high-end is still setting record prices in Southern California and the market has been fueled by global interest in Los Angeles properties. Increased inventory and the difficulty in getting loans still effect the lower priced properties. With the higher prices of 2013 factored in, it is important to have your property properly priced to get a prompt sale. There is a jump in the number of condo listings with folks interested in making the transition to a single family house before interest rates change. As of April 2014 fixed rates are holding around 4.5 %.

The Los Angeles market made a tremendous upswing in 2013. Low interest rates, investor participation including Wall Street groups, more cash buyers, spec builders and lower inventory all contributed to prices rising in 2013, especially in the highly desirable Westside. Rents are definitely on the rise as well.

The market is still recovering. There are many short sales and foreclosures and properties that are well-priced are getting multiple bids. Financing is still an issue especially on high-end properties and there seems to be more cash buyers in the market right now even though interest rates are at an historic low. Los Angeles rental prices increased in 2012 and seem to be holding. While inventory is down from last year there are still many opportunities.

Holmby Park Realty specializes in Bel Air Real Estate and Holmby Hills Real Estate