Values Rising
Despite the high mortgage rate environment eroding home affordability, home values in Los Angeles County have been on the rise after bottoming in December.
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Home Price Appreciation
The catastrophically low supply of available homes will continue to propel a rise in home values.
Plenty of housing naysayers have been calling for a severe market correction ever since home values skyrocketed higher after the initial COVID lockdowns from June 2020 through May 2022, two years of rapid appreciation. Then with mortgage rates climbing sharply from 3.25% in January of last year to 7.37% in October, the naysayers’ chorus grew much louder. Many anticipated a sharp decline in home values that rivaled the Great Recession. They can get quite emotional about their position. On the face of it, experiencing a swift rise in home values reminiscent of 2000 through 2005 and then the massive erosion in home affordability last year, it is understandable that some would conclude that prices would fall. And they did for seven months last year, but that all changed after they bottomed out in December.
Active listings:
The active listing inventory in the past couple of weeks increased by 327 homes, up 5%, and now sits at 7,514 homes, its largest rise of the year. It is still the lowest level for an end to June since tracking began in 2012. In May, 37% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 3,380 less. Last year, there were 9,673 homes on the market, 2,159 extra homes, or 29% more. The 3-year average before COVID (2017 to 2019) was 12,885, or 71% more.
Demand:
Demand, the number of pending sales over the prior month, decreased by 86 pending sales in the past two weeks, down 2%, and now totals 3,833. Last year, there were 4,526 pending sales, 18% more than today. The 3-year average before COVID (2017 to 2019) was 5,789, or 51% more.
Los Angeles County Housing Summary
- With supply rising and demand falling, the Expected Market Time, the number of days to sell all Los Angeles County listings at the current buying pace, increased from 55 to 59 days in the past couple of weeks. It was 64 days last year, very similar to today, but was rapidly cooling with skyrocketing rates.
- For homes priced below $750,000, the Expected Market Time increased from 36 to 37 days in the past couple of weeks. This range represents 27% of the active inventory and 41% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time remained increased from 40 to 43 days. This range represents 17% of the active inventory and 24% of demand.
- For homes priced between $1 million to $1.5 million, the Expected Market Time remained increased from 53 to 57 days. This range represents 16% of the active inventory and 18% of demand.
- For homes priced between $1.5 million to $2 million, the Expected Market Time remained increased from 71 to 76 days. This range represents 10% of the active inventory and 8% of demand.
- For homes priced between $2 million and $3 million, the Expected Market Time in the past couple of weeks increased from 93 to 111 days. For homes priced between $3 million and $4 million, the Expected Market Time increased from 137 to 153 days. For homes priced between $4 million and $8 million, the Expected Market Time increased from 235 to 241 days. For homes priced above $8 million, the Expected Market Time increased from 531 to 676 days.
- The luxury end, all homes above $2 million, account for 29% of the inventory and 11% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.6% of all listings and 0.9% of demand. Only 26 foreclosures and 20 short sales are available to purchase today in all of Los Angeles County, 46 total distressed homes on the active market, down four in the past two weeks. Last year there were 26 total distressed homes on the market, slightly fewer than today.
- There were 4,355 closed residential resales in May, 21% less than May 2022’s 5,514 closed sales. May marked a 20% rise compared to April 2023. The sales-to-list price ratio was 102.2% for all of Los Angeles County. Foreclosures accounted for just 0.4% of all closed sales, and short sales accounted for 0.2%. That means that 99.4% of all sales were good ol’ fashioned sellers with equity.
