Los Angeles has been in the driver’s seat for about a decade now when it comes to being an ideal seller’s market. However, things are shifting fast in 2019. The City of Angels has fallen from grace as far as real estate values go today. The latest trends show a slow down with home prices leveling off and the number of overall sales significantly down from the average.
Affordability and rising mortgage rates are a couple of reasons for the softening market. In addition, realtors say that Millennial buyers are not hot for home hunting like they were in recent years. Would-be buyers have become shut out of the game because home values in L.A. have skyrocketed. The city is also known for wages that lag considerably behind housing costs. For example, lower-earning residents would need to shell out more than 83 percent of their yearly incomes just to meet the monthly mortgage payments on an average home purchased there.
Mortgage rates are expected to hit 5.5 percent by the end of 2019. Potential move-up buyers are also staying still and keeping their existing homes. Instead, they will make renovations and be satisfied with their current low mortgage rates.
Those who rent are also feeling the struggle and having to set down roots in the cheapest neighborhoods of L.A. or get a roommate just to meet the rising housing costs. That means that renters who desire becoming homeowners are finding it almost impossible to gather enough funds for a downpayment.
For example, looking nationwide, the median price for a two-bedroom apartment is $1,180. That is nearly 33 percent below the L.A. price.
This is Los Angeles’ reality; the rate of homeownership there is one of the lowest in the country. In L.A., 64 percent of households rent instead of own, and even that poses a hit to the wallet.
If one is a seller with a great property, the house will probably go but not at the crazy pace before. L.A. sellers have to be aware of the competition, especially for more expensive properties.
If one’s an L.A. buyer, there is less buyer competition and more inventory in that respect. Buyers don’t have to rush and can take time to find the home that fits into their budget.