It’s March in Los Angeles and it looks like the bizarre winter weather will soon be behind us! That usually means it’s an active time for Southern California home buyers and sellers. But is that the case right now with a looming recession and the possibility of interest rates going even higher?
We asked Heyler co-owner and Real Estate Expert Sean McMillan for his thoughts on the housing market and what it means for those of us living on the Westside of Los Angeles.
What are home sellers in West LA experiencing right now?
Interesting question and hopefully as interesting a response. There are several factors that impact the local WLA housing market.
The first being that there is low inventory. Perhaps the most common statement by both buyers and by agents is that the lack of inventory has created a multiple offer climate for well-priced homes. If someone wanted to capture the height of the market, it could be close to right about now...for "affordable homes.” The higher-end properties, think $5m and above, are taking longer to sell.
For example, in the 90025 and 90064 zip codes:
It is definitely a changing market, but for now, a well-prepared (with furniture staging, freshly painted and well-priced) property will get activity and close for an average of 95% of list price. The home buyers of today are looking for less of a project/and or work so market preparedness is a key to success.
Sellers have to be more patient and prepared for the possibility of renegotiation.
What is the situation like for home buyers?
Interesting times for buyers. With the low inventory there is more competition and that has an upward pressure on pricing, however given the rising interest rate climate of today, that can make buyers more apt to cancel escrows if their findings during the inspection process are not to their liking.
It's competitive but the balance of power between buyers and sellers seems to have more equilibrium these days as adverse to the past few years.
What do you see happening with interest rates?
Surprisingly high inflation (is it really a surprise?) has pressurized the interest rate market notably higher. The Fed has maintained a firm resolve to continue to raise rates so as to cool the inflationary pressure.
The Fed said it best themselves, "the battle will be difficult, with both ups and downs along the way."
What do see for the future, oh wise one?!
This is by far the hardest question that you've asked. It is pretty darn difficult to see the forest through the trees. My general take is this - We are going to go through some economic pain, as a country, as a city and as an industry. There will likely be a thinning of the herd so to speak, with less and less agents able to earn a living resulting in them moving on to other industries. I think that will be a direct reflection of tight inventory, higher rates, greater costs of goods and services.
However, Southern California has almost always been the trendsetter in terms of real estate recovery as we have the jobs, the industries and the climate that people want.
And of course I need to ask the obligatory, “Is Google really coming?” question. The Google complex in the old Westside Pavilion space is still unoccupied leading to lots of rumors.
Patience is a virtue. According to my crystal ball, there will be an initial wave of google employees arriving in fall of 2023.
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