The Los Angeles real estate market is showing signs of being affected by the rising levels of inflation and mortgage rates as the year progresses.
New data from Core Logic shows that the real estate market sales in May of 2022 are possibly the worst in 34 years, dropping 16 percent from the heights of May of 2021, as reported by CBS. Sellers have also started cutting the listing prices because buyers are having difficulty with the increase in mortgage rates and the country’s rising inflation. This has made potential buyers much more cautious about jumping in on a sale.
These price cuts, which are happening not just in Los Angeles, but all over the United States, are a warning sign that the real estate’s golden period may be coming to an end. Still, this doesn’t necessarily mean that home prices are dropping and even with the current conditions in the market, most home sales are still being purchased for more than the listing’s price.
Core Logic has also reported that median monthly payments in Los Angeles have increased 40 percent from 2021 to 2022. Real estate experts blame this on the high prices of homes and mortgage rates for this occurrence according to CBS News.com.
Yolanda Cortez, an L.A. area agent at Century 21 Realty Masters told the Los Angeles Times, “I have buyers who are now kind of at a standstill.” Cortez added that because of the interest rates rising, buyers who had other plans are being forced to consider areas like the Antelope or Victor valleys in the high desert which are 60 miles from the Los Angeles city center.
All of this is causing a domino effect of fewer homes going into escrow, and a rising inventory of homes for sale which is causing sellers to have to make changes. The number of homes for sale that has reduced their listing prices has doubled in the last year. In fact, 16.2 percent of home listings in Los Angeles County have cut their price in the last four weeks. This is up from 7.5 in the same period last year.
Altos Research’s founder Michael Simonsen feels that even though there are buyers who are now priced out, he thinks that other buyers may have hit the pause button for different reasons. With inventory rising, those who can buy have decided not to which has caused a slowdown to become real.
Simonsen said, as quoted by the Los Angeles Times, “Buyers know they can wait maybe until the summer and have more selection.”
This article was originally published by the Santa Monica Mirror