As we enter the second quarter of 2017, several emerging real estate trends promise to have significant impact on the Los Angeles market for the rest of the year. If you’re looking to buy or sell a home in the city anytime soon, you’ll do well to keep track of these trends to help guide your decisions.
Here are five trends that are worth looking into.
- Home prices are appreciating
If you’re thinking of selling your home, it looks like now is a good time to do it. In Los Angeles County, median home prices in February 2017 are up almost 8% from February 2016. This rate is well above the projected nationwide home appreciation rate of about 3.9%.
February data also show that half of the homes sold in the city of Los Angeles were for over $1 million, a price tag that’s almost twice the median home price here. Additionally, there’s an 11% increase in sales of homes priced above $500,000, and a 14.1% increase for homes priced over $1 million.
- Low housing inventory is keeping it a sellers’ market
Low inventory is one of the factors that is driving home prices up. According to S&P CoreLogic Case-Shiller, the shortage of supply has caused home prices to soar to its highest peak in 30 years. Bidding wars are an inevitable result. In Los Angeles, the number of bidders for some properties is more than three times the normal, and many homes are selling for much more than their asking prices.
- Builders are focusing on the higher-end market
Homebuilders have been more active in the past few years than at any other time after the recession. They’re focusing on luxury and multi-family properties, which, they say, offer better margins than starter homes given higher construction and building preparation costs. If you’re in the market for a luxury home, you will find plenty of choices among the latest developments in the city.
- More people are moving to the suburbs
Homebuyers are looking into suburbs for more affordable housing options. In Los Angeles, outlying neighborhoods like Cypress Park and Highland Park are seen to post high home sale gains this year, with Cypress Park named the hottest L.A. neighborhood for 2017 by Zillow.
And while suburban homebuyers are willing to live with long commutes and relatively fewer amenities, they just might find they have less to worry about. “Surbans” are expected to be a hot trend in the near future. These are denser communities outside the city’s core with a more diverse property mix – including single-family homes, townhomes, and condos – and more urban amenities, such as offices, schools, restaurants, entertainment, and others.
- Rising interest rates may slow down home price increases
The Federal Reserve has recently announced the impending increase in its key interest rate, with two more rate hikes expected in 2017, and three in 2018. In anticipation of these, mortgage rates have risen to 4.3% in March 2017 from 3.73% during the same period last year.
Current rates are still historically low, however, and with the improving economy and job market, housing demand is not expected to slow down anytime soon. In the long term, higher interest rates may eventually temper home price increases.
These are clearly exciting but challenging times in the real estate industry. Whether you’re buying or selling a home in Los Angeles, we will be happy to provide you with the expert guidance you need in this dynamic market. Give us a call when you’re ready to get started.