5 NEED TO KNOW REAL ESTATE TRENDS IN LOS ANGELES
Los Angeles luxury real estate is one of the most competitive markets in the country at the moment, with home prices and demand at an all time high. Staying aware of the latest market trends and events is essential to winning in this market. Here are some top tips to keep you ahead of the pack:
1 | INTEREST RATES ARE RISING
Interest Rates are still hovering at a long time low, especially in the mortgage market. Back in March of 2017, the Federal Reserve increased interest rates from 0.75% up to a full 1% for the first time in a while. This is usually good news for our economy, as increased interest rates mean that the economy needs less and less help from the FED. On June 14th of 2017, the Federal Reserve announced their decision to increase the interest rate by another quarter of a point. We anticipated three increases this year, so we do predict that one more is on it’s way for later this year.
What does this mean for the real estate market?
Higher interest rates are almost always a welcome sign in the world of real estate because of their impact on median home prices. While on one hand higher interest rates may price some home buyers out of the market by making loans more difficult and more expensive to qualify for, they drive sellers to responded to these shifts by knocking thousands, or even millions, off of asking prices. In a macro sense, rising interest rates are a positive sign for our economy, as the US continues to heal from the 2008 Recession.
2 | CASH IS KING
Homes are selling in record speeds, many homes in the Los Angeles market, if priced aggressively will often sell in about a week or even less! In these conditions where demand for homes far supersedes supply, buyers that can come to the table with cash and close more quickly, are going to continue to dominate in this fast paced market.
Why is cash better?
When making an offer contingent on being approved for a loan there are a few more steps involved that can slow down a real estate transaction. These include loan approval processes, underwriting, lender appraisals and a host of other contingencies enforced by a lender or bank before they will provide the funding for a transaction to be completed. When making a cash offer on the other hand, there is one less agency taking a risk, so transactions can move more swiftly. Of course the routine inspection processes and other contingencies are usually involved, there is one less party in the transaction. Cash transactions tend to be the most popular of their kind in LA’s luxury market.
3 | MILLENNIALS BREATHE NEW LIFE INTO LOS ANGELES
A recent study conducted by Forbes suggests that Millennials are continuing migrate into major metro centers such as Los Angeles, San Francisco, and New York. Millennials are a welcome change in our city, because their lifestyles, tech savvy, and spending habits bring advancement, growths and stimulus to not only the city at large, but also the many residential enclaves surrounding our city, including East Hollywood, Echo Park, Boyle Heights, etc. These areas as well as others, specifically around the East Side, Mid-City, and South Westside are slated to become very popular communities in the coming years.
4 | HOMES ARE SELLING IN LESS TIME
Los Angeles, and the country as a whole is experiencing a level of demand that has virtually never been witnessed before. Homes are selling in record-setting speeds all around the country, and this looks like it may just be the beginning as we aren’t anticipating a slowdown any time soon. CNBC recently reported that home sales spiked 9% in March of this year, compared to March of 2016. “The typical home went under contract in just 49 days, down from 60 days a year ago,” the source reports. This report speaks to the country as a whole, but in many Los Angeles markets, we are seeing even more staggering figures!
5 | LUXURY REAL ESTATE MARKET IS ON THE RISE
According to recent quarterly figures, the Los Angeles luxury market is riding a strong wave as the market continued to make steady improvements from Q4 of 2016. The overall trend is that prices are steadily increasing in most markets, and days on market are rapidly decreasing. To be more specific, home prices increased by 7.72% across the board, whereas inventory decreased by 18.17%, and days on market declined by a staggering 38.33%! (Information sourced from The MLS)
FIND THIS INFORMATION HELPFUL?
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