LA Homes Inventory In California Down 57%Topic: Home buying
Now is a great time to buy Los Angeles real estate. The Los Angeles monthly inventory went from a 10.2 months supply back in November of 2008 to a current 4.4 month supply today. What does this mean to the typical Los Angeles home buyer? Get ready to make that offer. If the bottom hasn't completely been reached, it's just about there.
Here are some indicators leading to this statement. From November of last year until now, inventory of Los Angeles homes on the market has declined a whopping 57%. These statistics are based according to Los Angeles MLS data. When inventory is low, buyers start scrambling to make an offer on a house as other buyers are competing against them.
Seller's begin to increase their prices due to heavier competition for their home. If inventory continues to decline over the next year as it has been, home buyers will compete even more for the home they desire. It's all about Supply and Demand.
This does not mean that Los Angeles homes are going to be selling like hotcakes. What it does mean is that it's likely that home prices increase slightly during the next year. The real estate market has definitely been picking up recently, with the median home sold price down 3 percent from last year. That's just one of the factors that is attributing to a more robust local real estate market.
Other factors include the extension of the federal tax credit for first-time buyers, government offering low-down-payment mortgages for these first-time home buyers, along with extremely low mortgage rates for all and high investor activity especially in the foreclosure marketplace.
Deals still abound in this market, due to a steady supply of foreclosures still available. Investors especially have become quite adept at acquiring distressed homes. There hasn't been this type of foreclosure activity in our generation's time frame. The investors who have cash available are actually having a hey-day in real estate purchases. The low prices make it affordable to buy low and rent out with monthly cash flow. This was extremely hard to do in the past, typically investors either had to put down a large down-payment or had to have acquired the property in the way distant past to have any sort of cash flow at all. The loan payments, insurance and maintenance costs made it just about impossible to have positive cash flow each month on newly acquired Los Angeles investment properties.
The current Los Angeles real estate market will not fully rebound until there is financing in place for the higher priced homes. The median price of a Los Angeles home is $377,000. Due to Los Angeles as a whole having more pricier real estate than most counties, it goes to follow that financing is harder to obtain. Financing is easier to get for the lower priced homes due to the government programs in place. The higher priced homes do not have that advantage, thus luxury home seller's are in a much more unpredictable state of affairs. Most luxury home seller's are sitting tight and waiting until a real estate rebound occurs. If they were to sell their home now, their sales price may be too low to even break even from what they bought it for. On a positive note, rent prices have steeply risen on luxury homes. Many high-end Los Angeleshome owners have opted to rent out their home until the market adjusts, to a point of being able to sell at a profit.
Let's see what this market does in the near future, it's an exciting time in real estate. Buyers are buying low and sellers are getting more optimistic for the rebounding market.
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Really great article with very interesting information. You might want to follow up to this topic!?! 2012
Thanks for sharing. What a pelasure to read!
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