Where's The Los Angeles Home Market Heading? Prices Coming Off Bottom - Tightening Market over $1 million - Under $1 million Market in Full Swing
To get an impression of where the Los Angeles home market is heading, we took a look at the combined statistics of seven Los Angeles neighborhoods: Beverly Center - Miracle Mile, Hancock Park - Wilshire, Hollywood Hills East, Los Feliz, Silver Lake / Echo Park, Sunset Strip - Hollywood Hills West, and West Hollywood.
Our assessment? The worst is behind us. In terms of pricing, the bottom may have been reached somewhere in the 1st half of 2009.
This is a broad market, covering everything from bank-owned shacks to gilded mansions. To further break it down, we separated the market into the under $1 million and over $1 million segments.
Over $1 million market. For much of 2009, job and portfolio loses, coupled with jumbo loan underwriting hurdles, created a challenging environment for residential real estate. Data show that the percentage of homes under contract has been trending up since December 2008. As bad as the news has been, it hasn't arrested the sale of houses priced over $1 million.
Under $1 million market. The under $1 million market has been tightening up since it reached its most flaccid state in the 1st half of 2008. Now, nearly one in five homes under $1 million is under contract, compared to one in ten homes for much of 2008.
Conclusions: This central area of Los Angeles, which has always had high barriers to entry because of price, will still continue to have high barriers to entry because of price. The median sales prices is trending up. The market, in all ranges of the price spectrum, is experiencing increased sales activity.
Some unknowns remain in terms of how many owners in distress will get foreclosed upon, elect to do short sales, or negotiate loan modifications. But in terms of current dynamics, the market is in an upswing and the bottom is behind us.