Houses For Sale in Los Angeles: Will the Prices Ever Drop?
Ever since 2009, prices of houses for sale in Los Angeles have risen steadily and sometimes even steeply, but what’s going to happen in 2020? If you’re looking at houses for sale in Los Angeles, it’s natural to wonder if the prices are ever going to drop and when is the right time to buy.
The LA Market Up to 2019
From 2009 to 2019, nearly LA neighborhoods saw home prices go up steadily. There were a number of reasons behind this increase in home prices. For one, California has been experiencing economic growth, bringing jobs back to the area and people with them. For another, the population continues to grow, but new home construction hasn’t always kept pace, meaning there are sometimes more people looking than there are homes.
Finally, many of the neighborhoods and suburban towns in the greater Los Angeles area have put considerable thought and money into improving infrastructures, public transit systems, and public spaces while attacking crime head-on. That makes neighborhoods like Ladera Heights, Playa del Ray, and Redondo Beach even more attractive than ever. These neighborhoods are convenient for any part of the city, while each area itself contains many of the things people are looking for in a neighborhood, from parks to fine dining.
The 2019 Cool Off
In 2019, the Los Angeles housing market finally started cooling off. In previous years, housing prices in some neighborhoods were going up by as much as 10% a year, and in no year did prices rise by less than 5%. Between 2015 and 2018, in fact, the average home price went up by more than $110,000.
But in 2019, prices didn’t even rise a full percentage point, despite strong sales in the summer and fall. Of course, that total is just an average, and some areas, like Compton, saw prices rise considerably while others actually saw a small price drop, including Redondo Beach and Calabasas.
In the first half of the year, sales were sluggish in part because home prices in 2018 had climbed to record levels. They peaked in April of 2018, pushing away buyers, and have since been falling year-over-year every month. In the summer of 2019, mortgage interest rates dropped significantly, and that made it possible for more buyers to jump in. Sales, and prices, went up quickly, though never to their 2018 levels.
The Forecast for 2020
In 2020, prices of houses for sale in Los Angeles are expected to continue to rise, but only very moderately. Construction of new housing is up somewhat, interest rates continue to be affordable, and there’s a healthy mix of buyers and sellers. That typically adds up to slow and steady price growth. Experts predict home values will rise nationwide in 2020 but that LA’s rise will be lower than the national average.
The current best guess is that prices will rise around 4% during 2020. Appreciation is predicted to continue to rise for the following three years, which is good news for both investors and homeowners: LA real estate continues to be an investment that pays off.
What It Means for the Investment Buyer
For anyone looking at real estate as an investment, now is the time to buy. The housing market has been hot for years, but it’s starting to cool, and there’s more selection than most people think because many buyers still believe prices are at their peak. This means we’re approaching a natural trough in the market, and if you are able to buy now, you enter the trough on the right side.
An investment now gets you the best prices. You can then weather the valley of this trough with only modest appreciation, then come out on the other side ready to sell when prices heat up again. Meanwhile, strong housing demand in the LA area means that rental properties continue to return strong, steady income, which is always good news for an investment buyer. Rental rates across the city have been reliably going up 7% a year.
What It Means for the Home Buyer
If you’re looking at houses for sale in Los Angeles for yourself and your family, is now a good time to buy? Will prices ever go down? The truth is that prices are already down, making this year a good time to consider a new home. Once this temporary dip in the market turns around, prices will continue to rise. Interest rates are currently favorable for those looking for mortgages, but those can also turn on a dime. Now is the perfect time to find a new place for you and your family.
In the past few months, there’s been an approximate 8% decline in the number of homes being sold, and when that happens, buyers become more willing to negotiate. It’s easier than ever to bargain from a strong position, and with more properties for sale, you’re less likely to be priced out by a bidding war with another buyer.
If you’re considering buying a home for your own family, also consider that while home prices are cooling, rental rates are continuing to go up, despite rent control acts. A strong military population in the area means there is always consistent demand for rental properties appropriate for families. When that happens, rents always rise. While buying does mean coming up with a down payment, renting could end up being far more expensive in the end. It’s always a good idea to put your monthly payments into yourself through a mortgage than to give that money to a landlord!
Should You Look at Houses for Sale in Los Angeles?
There are some good reasons not to wait to buy real estate in Los Angeles. LA is rivaled only by New York City when it comes to population. The area’s ideal location near the mountains and sea, closely connected to Asia and Central and South America by air and trade, and with a favorable climate mean it’s unlikely people will ever stop being attracted to Southern California. When people want to live in an area, communities grow, business opportunities don’t dry up, and investors continue to inject money into the area.
California is also the world’s sixth-largest economy, and unemployment in the whole state has been at record lows for years. This boom is the result of growth in several important industries, including construction, trade, transportation, education, health, manufacturing, leisure, and tech.
When the economy is healthy, unemployment is low, and people are drawn to an area, it’s a good bet that real estate will be a sound investment. Whether you’re looking to buy as just one part of an investment portfolio or you’re investing in your family and looking for your first home, your property in the LA area will appreciate and offer ongoing value.
Getting Started With Los Angeles Real Estate
LA is a huge market with thousands of properties and significant differences from one neighborhood to another. Without expert, insider knowledge, and a deep understanding of how to read the trends, finding the right property becomes a lot harder.
When you need an expert insider on your side, contact Teresa Mack. She is LA’s real estate specialist with years of experience and a commitment to helping you find the right neighborhood and the right property to maximize your opportunities.