It wasn't all that long ago that buyers controlled the ebb and flow of real estate negotiations in our area. With the L.A. Times and C.A.R. reporting that Southern California home building is stuck at historic lows and inventory scarce, the tide has quickly changed and it is definitely sellers who now rule the roost. In Los Angeles County, January saw the lowest housing inventory numbers in a decade with 15,311 single family homes and condos available. That is over two-thirds less than the October 2007 peak of 53,302. There has been a slight uptick as of March 1st, but the lack of inventory, both county-wide and in the South Bay, is leaving many prospective buyers on the sidelines.
There is, however, plenty of positive news for buyers regarding the 2014 housing market. Prices are expected to rise slightly but nothing like the 20% to 30% increases experienced throughout 2013. Mortgage rates are also rising slightly but are still lower than historical averages and, according to Zillow, actually went down yesterday for the first time in 4 weeks for a 30-year fixed. California's unemployment rate has steadily been falling as the state has regained 70% of the more than 1.3 million jobs it lost as a result of the Great Recession. And, even though inventory levels remain frustratingly low, they are still up over this time last year (January's numbers, notwithstanding). Now, if we can just get those builders building!
The slow construction is by far the biggest hurdle facing home buyers. Southern California's supply of new homes had dwindled to about 2,200 at the end of last year, compared with a peak of about 19,000 in 2006. Many smaller builders were wiped out by the crash and those that remain can't get financial backing from institutional investors. In the South Bay, especially, there is also the major problem of few ready-to-build lots with the necessary approvals in place. The good news is that many projects that were abandoned in the housing crash are being revived as larger, publicly traded builders revisit stalled projects.
There is, however, plenty of positive news for buyers regarding the 2014 housing market. Prices are expected to rise slightly but nothing like the 20% to 30% increases experienced throughout 2013. Mortgage rates are also rising slightly but are still lower than historical averages and, according to Zillow, actually went down yesterday for the first time in 4 weeks for a 30-year fixed. California's unemployment rate has steadily been falling as the state has regained 70% of the more than 1.3 million jobs it lost as a result of the Great Recession. And, even though inventory levels remain frustratingly low, they are still up over this time last year (January's numbers, notwithstanding). Now, if we can just get those builders building!
Infill, rehab and perhaps conversion offer the diversity for first timers and downsizing empty nesters. At least over the near term. Buyers or investors of spec or high end homes will invest regardless if the local process is accommodating. Local agencies continue to contract with diminishing resources.
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