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  • Writer's pictureRobert A. Silva

Is the Market about to Crash... Again?

When it comes to the Southern California real estate market, the only thing you can be certain of is the uncertainty of it's future. Even when the world was engulfed in a global pandemic, the prices across the state reached an all-time high when many said the market would crash. Fast forward to today, and the median home price in Southern California has steadily increased to over $600,000. But, we may finally start to see a crack developing in this bubble yet.

In the past few months we have noticed from our own personal research in the South LA market that although the sales price of homes has increased by at least $50,000 across the areas, the number of sold homes has dropped from 20-30%. That is a HUGE drop in inventory. But what does that mean?

When the number of homes sold drops, it shows that that the availability of homes is becoming scarce. Scarcity usually drives up the price, but when there are so few homes left to sell, you'll start to see homes staying on the market longer (30 days+) and eventually you'll start to see the prices drop across the board. And if this is happening to one of the more affordable areas in Los Angeles, you can bet that other trendier neighborhoods will soon follow suit.

So, the next "crash" may not be a crash so much as a slowly descending plane landing on the runway (unless accelerated by some larger force like a global pandemic or act of war). But rest assured that the market WILL come down again.

It may not be through some life-changing calamity, but all things must come to an end. People are tired of paying close to a million dollars for a piece of land no bigger than your local convenience store, and the market is reflecting that increasing trend of buyers saying "enough is enough".

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