The Los Angeles real estate market could finally slow down
Real estate sales have fallen 21% over the past year
By Dolores Quintana
The Los Angeles real estate market is showing signs of being affected by rising inflation rates and mortgage rates as the year progressed.
New data from Core Logic shows May 2022 housing market sales may be the worst in 34 years, falling 16% from May 2021 highs, as reported by CBS. Sellers have also started slashing listing prices because buyers are struggling with rising mortgage rates and rising inflation in the country. This has made potential buyers much more cautious about jumping into a sale.
These price drops, which are happening not just in Los Angeles but across the United States, are a harbinger that real estate‘s golden era is coming to an end. Still, that doesn’t necessarily mean home prices are going down and even with current market conditions, most home sales are still being bought for more than the listing price.
Core Logic also reported that median monthly payments in Los Angeles increased 40% from 2021 to 2022. Real estate experts attribute this to high house prices and mortgage rates for this event according to CBS News.com.
Yolanda Cortez, a Los Angeles agent at Century 21 Realty Masters, told the Los Angeles Times, “I have buyers who are now rather stalled.” Cortez added that due to rising interest rates, buyers who had other plans are forced to consider areas like the Antelope or Victor Valleys in the high desert, 60 miles from downtown Los Angeles.
All of this is causing a domino effect of fewer homes going into receivership and a growing inventory of homes for sale, forcing sellers to make changes. The number of homes for sale that have reduced their listing prices has doubled over the past year. In fact, 16.2% of real estate listings in Los Angeles County have reduced their price in the past four weeks. This is up from 7.5 at the same time last year.
Altos Research founder Michael Simonsen believes that while there are buyers whose price is now sold out, he thinks other buyers may have hit the pause button for different reasons. With the increase in inventory, those who can buy have decided not to, which has caused a real slowdown.
Simonsen said, quoted by the Los Angeles Times“Buyers know maybe they can wait until summer and have more choice.”