Los Angeles Real Estate Market Overview Dec 2024
The Los Angeles Real Estate market is showing signs of cooling down from its peak, with prices experiencing some slight fluctuations but overall remaining elevated compared to last year, despite a significant dip in sales.
Inventory is calculated monthly by taking a count of the number of active listings and pending sales on the last day of the month. If an inventory is rising, there is less pressure for home prices to increase. With 3.5 months of supply left, it is still short of what economists say is needed for a balanced market. Hence, the Los Angeles County housing market will continue to see upward pressure on home prices.
Months Supply of Inventory (SFH) for Los Angeles County is now 3.5 months.
Months Supply of Inventory (SFH) for the Los Angeles Metro Area is 3.6 months.
Months Supply of Inventory (SFH) for Southern California is 3.5 months.
The ongoing shortage of homes for sale is a complex issue with a number of factors at play. From increasing construction costs to stringent zoning and development regulations, there are a multitude of challenges that have made it difficult for developers to increase the supply of housing.
Putting all these pieces together, what can we say about the overall market trends?
Cooling Down, Not Crashing: The market is definitely cooling down from the highs of the past couple of years. We are no longer seeing bidding wars, and houses are taking a bit longer to sell. However, the fact that year-over-year prices are still higher means it’s not a crash. I believe that we will continue to see some slight fluctuation but overall a slow stabilization.
Price Adjustments: While prices are up year-over-year, the small decrease in the recent months means that the market is adjusting to higher interest rates and buyer caution.
Buyer Hesitation: Many buyers are taking a more cautious approach, possibly waiting for a more favorable situation, either a reduction in interest rates, or some other economic relief.
More Inventory, Slight Shift in Power: The modest increase in inventory means buyers have slightly more choices than before and are negotiating more.
Is It a Buyer's or Seller's Housing Market?
This is the million-dollar question, isn't it? Is Los Angeles currently a buyer's or seller's market? The answer is that it's becoming more of a balanced market, but with a slight edge to sellers. Let me explain.
A “seller's market” usually features low inventory, high demand, and rapidly increasing prices. In contrast, a “buyer's market” means more homes for sale, lower demand, and prices that are either stagnant or falling. I think that for the last couple of years we have been firmly in a sellers market, but over the last few months, we are seeing the market change.
The current market has some of both elements. We are still seeing prices year over year still on an upward trajectory, which implies that it is more of a seller's market, but we are also seeing fewer sales month to month, and higher inventory, which points to a more balanced market. The slight decrease in median home prices over the past month and the rise in the number of homes available for sale (or at least taking longer to be sold) means that buyers have a little more power going into 2025. While sellers are still likely to get a good price, buyers can negotiate a little more and may have more options in the new year.
Norada Estates & California Assoc. of Realtors
Comments