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
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