Challenges of Supply Situation
Before the pandemic, there were nearly twice as many homes on the market as today, and that will not change anytime soon, according to current trends.
The inventory of homes for sale has been shrinking due to tighter lending standards, fixed-rate mortgages, and fewer distressed sales. The number of homeowners willing to sell their homes has also reduced due to locked-in low fixed-rate mortgages. This trend will continue to pose a supply challenge for years to come.
Active Inventory
The active listing inventory in the past couple of weeks increased by 330 homes, up 4%, and now sits at 8,210 homes, its highest level since December. It is still the lowest September reading since tracking began in 2012. The inventory has not yet reached a peak, moving past its typical peak between July and August. In August, 34% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 2,799 less. Last year, there were 10,902 homes on the market, 2,692 extra homes, or 33% more. The 3-year average before COVID (2017 to 2019) was 13,369, or 63% more.
Demand
Demand, the number of pending sales over the prior month, decreased by 71 pending sales in the past two weeks, down 2%, and now totals 3,419. Last year, there were 4,256 pending sales, 24% more than today. The 3-year average before COVID (2017 to 2019) was 5,245, or 53% 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 68 to 72 days in the past couple of weeks. It was 79 days last year, slower than today.
- For homes priced below $750,000, the Expected Market Time remained unchanged at 47 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 increased from 48 to 51 days. This range represents 18% of the active inventory and 25% of demand.
- For homes priced between $1 million to $1.5 million, the Expected Market Time increased from 65 to 72 days. This range represents 17% of the active inventory and 17% of demand.
- For homes priced between $1.5 million to $2 million, the Expected Market Time increased from 93 to 112 days. This range represents 10% of the active inventory and 7% of demand.
- For homes priced between $2 million and $3 million, the Expected Market Time in the past couple of weeks increased from 120 to 122 days. For homes priced between $3 million and $4 million, the Expected Market Time increased from 153 to 181 days. For homes priced between $4 million and $8 million, the Expected Market Time decreased from 289 to 282 days. For homes priced above $8 million, the Expected Market Time increased from 582 to 1,110 days.
- The luxury end, all homes above $2 million, account for 27% of the inventory and 10% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.5% of all listings and 1% of demand. Only 31 foreclosures and 13 short sales are available to purchase today in all of Los Angeles County, 44 total distressed homes on the active market, down four in the past two weeks. Last year there were 46 total distressed homes on the market, similar to today.
- There were 4,331 closed residential resales in August, 8% less than August 2022’s 4,706 closed sales. August marked a 14% rise compared to July 2023. The sales-to-list price ratio was 100.3% for all of Los Angeles County. Foreclosures accounted for just 0.5% of all closed sales, and short sales accounted for 0.02%. That means that 99.5% of all sales were good ol’ fashioned sellers with equity.
For the complete Los Angeles County Housing Report please contact me.
