Status of the Los Angeles Real Estate Market in 2017
The Los Angeles real estate market saw record spikes in home prices throughout 2017. As of August 2017, median prices were up 9.4%, while sales dipped 4.7%. The nationwide inventory crunch is to blame for soaring prices, with L.A being among the hardest hit in that aspect. While home prices aren’t expected to stop rising anytime soon, the overall rate is expected to ease somewhat, but the inventory crunch remains a huge problem. In an L.A Times feature on the issue, Richard Green, director of the USC Lusk Center for Real Estate, estimated that Los Angles County was short 100,000 homes, with 30-35,000 needed to be added each year just to keep up with demand. However, only 25,000 are being built annually, so the area is falling further and further behind.
All of this has compounded the affordability issue, with only workers in the upper-income echelon able to afford homes in the area, while lower price inventory remains scarce. One of the worst aspects of this problem is that it’s forcing residents to consider moving elsewhere, with a poll by the Institute of Governmental Studies at UC Berkeley revealing that 59% of respondents have considered moving out of the area due to rising home costs. Many believe this could lead to a mass exodus of skilled workers.
Demographics in Los Angeles
With the rising cost of housing, Los Angeles is facing a crisis of affordability, adversely affecting many millennials, who opt against working in the area and choose more affordable areas. As such, rental website Abodo lists Los Angeles as having the lowest rate of homeownership in adults under the age of 35 in the nation. Only 17.8% of millennials in L.A own homes, with the rest paying rent. With prices being this high, millennials will need to save for decades just to be able to afford the hefty down-payments.
Average prices of housing in the Los Angeles Real Estate Market
In August 2017, the median price for a home in Los Angeles County soared to a record $580,000, nearly three times the national average. Condo prices in the downtown area are estimated at $620,000. Rents rose throughout the year, eventually leveling-out at a median cost of $1,350 a month for a one bedroom apartment, and $1,740 for a two-bedroom unit.
Reasons for growth and outlook for 2018
The real estate market in 2018 will no doubt be affected somewhat by the late 2017 LA County Wildfires, meaning that housing supply will be in even higher demand than usual, compounding the inventory crunch. Prices are expected to go up all year long, with L.A thought to continue as a seller’s market throughout the year. However, the gains are expected to be smaller, although bidding wars on the homes on the market have become the reality for many prospective homeowners. This is a definite advantage to anyone looking to put their home on the market. For sale inventory remains low, with a report from ReportsOnHousing.com stating that for sale listings are at their lowest since Spring 2013.