Los Angeles Is Still a Sellers’s Market
1. The economy is ripping along with no evidence of a slowdown anytime soon
This has been a very long housing recovery. Because the
economic recovery and the housing recovery have both continued over such a long
stretch, forecasters seem more and more cautious in their predictions. So,
while you can find some who suggest that we can’t sustain 3% growth over the
balance of 2019 or into 2020, these same predictions are generally very light
on their evidence to support such claims. The Fed has been on the low side of
these predictions, but even after the 3.2% 2019 Q1 surprise, they continue to
suggest more subdued increases into 2020.
On the other hand, there are almost no predictions at this
time of a recession in the near or mid-term. Couple this with no significant
inflation, solid wage increases, plus full-employment, and everything looks
positive for consumers in the next 20 months or so.
2. Inventories of unsold homes in Los Angeles continues to be low, though increasing
We have had an imbalance of buyers to sellers for many years
now, and there is still a reluctance to sell on the part of those who own their
homes with no mortgage, low interest rates if they do have a mortgage, and
benefits of prop 13 low property tax rates. Even those who move out commonly
put properties up for rent rather than sell.
During the last 10 years, investors have also gobbled up
huge numbers of single-family dwellings and now rent them out. This has reduced
supply.
Unless something comes along to pry these homes out of the
hands of those determined to hold on for dear life, lack of supply is going to
favor the sellers.
3. Lots of money in the hands of Gen X and Millennials – more dollars on the way
Gen X may be the quiet generation, but their grandparents
and parents are starting to pass out wealth to this group. The Boomers will
transfer wealth to their kids and grandkids in unprecedented amounts. At no
time in the history of humans has there been anything like this wealth
transfer.
Millennials are now getting to that place where they are
very likely to buy. Their income is going up due to experience, they need more
space for their family, even if it is only one or two kids, and they are more
likely to be interested in a house with a yard instead of an apartment. If they
get the down payment from Mom or her trust, they are likely to want to buy
something or move into something nicer.
4. Influx of immigrants will put additional pressure on housing in the LA residential realty market
Whether or not you want a wall is irrelevant. 2019 and 2020
will see the largest influx of legal and illegal residents ever. Don’t pay attention
to the politicians on this. The reason folks are coming here is JOBS. We have
the lowest sustained unemployment rate in history. Companies are struggling to
grow because they can’t find workers. That word gets out. Sure, some may be fleeing
difficulties, and some may actually be impressed by freedom. But whatever the
reason, there is going to be continued inflow at these levels as long as there
are jobs to attract them.
At the other end of the scale, the newly rich from all over
the world are still eyeing LA as a favorite place to settle. While there is a
bit of evidence that foreign capital for personal residences and investment has
slowed somewhat as prices have continued up and up, the overall picture is
unlikely to stay subdued. Family members will want to follow those who have
come ahead of them.
Techies are adding to the influx of residents to the Los Angeles Real Estate Market
Finally, though certainly not a small part of the story, LA
is likely to continue to be a huge destination for highly paid engineers,
programmers, content creators and related professionals in all areas of internet
and entertainment…especially where the two meet.
Silicon Beach must now include Hawthorne with SpaceX
dominating the neighborhood. There is no land left to develop, so when you have
more highly paid professionals bidding for the same number of housing units,
prices must go up.
If you are thinking of selling your home, the right realtor
will get you the highest price with the least hassle. And engaging a top-drawer
realtor costs no more than a rank beginner. Whit Prouty is ranked in the top 2%
of realtors and has written a book on how to sell your LA home. If you’d like
to discuss the value of your home or other aspects of a possible sale, Whit
will be more than happy to provide you with advice and direction. Give him a
call at 310-777-6302
Cal
BRE#: 01303275
