In 2011 Home Prices are Flat, But Inventory Declined a Dramatic 41% in Hills "West" and "East", Beverly Grove, Hancock Park, Los Feliz, Silver Lake and Echo Park; Price Increases on the Horizon?
2011 Median Home Price in Los Angeles (central) was about $850,000
Median Home Price
In 2011, the median home price in the central part of Los Angeles were essentially flat at around $850,000. The neighborhoods included are:
- Beverly Center - Miracle Mile
- Hancock Park - Wilshire
- Hollywood Hills East
- Los Feliz
- Silver Lake - Echo Park
- Sunset Strip - Hollywood Hills West
- West Hollywood
The fact that the median sale price is moving sideways means there is market stability. Sellers can sell today without the fear they are "leaving money on the table". Buyers can purchase without the fear that they must "jump in today" or be faced with rising prices tomorrow. But stable markets don't always remain stable for long...
In 2011, the months' supply of inventory declined steadily from 9.3 months to 5.3 months -- a significant 41%. (Months' supply of inventory is a measure of how many months it would take to sell all the homes currently on the market.)
What does this mean?
That the market is "tightening up". Although prices are currently stable, properties are being "absorbed" faster on the market, as buyers chase fewer and fewer properties
What about 2012? Where are we heading?
Our prediction is that prices will rise in 2012, even if by a small increment. Our reasoning is that an inevitable result of this decline in the months' supply of inventory is an increase in prices.
This assumes a stable financing environment, but the Fed has given every indication that they will maintain interest rates at current levels.
Other market forces may intervene (increase in short sales / foreclosures as a percentage of overall market, financial crisis #2 spurred by the euro, etc.), but current data supports a modest to partially sunny home market in 2012 this desirable section of Los Angeles.