In all of our past market updates, the most important thing to look at in assessing the real estate market is to look at all of the leading indicators. For that, we need to ignore and throw out what the media is saying about the market because a lot of times they use outdated stats and numbers that are nationwide and not specific to our market of Los Angeles. This is significant because the market is different in San Antonio, Texas, Orlando Florida, New York.
The number one indicator is the amount of new homes coming on the market. Now, it is down 29% compared to the same time last year. You might be thinking that this is due to all of the crazy things that has happened for the past 2 years, but looking at the past several years, this is the lowest amount of inventory to come in the market this time of year that I have ever seen. A lot of people are deciding not to put their homes on the market for multiple reasons.
The next indicator is the number of homes that are pending and currently active under contract. It is down 6% compared to last year. This is no surprise as there are fewer homes coming on the market since there are fewer homes for sale and the market has slowed a bit as homes are not selling at the frenetic pace as the beginning of the year. So these 2 are the leading indicators to look at.
What does this all mean to you if you are looking to buy a home in today’s market? The inventory is continuing to shrink which means prices are going up not only in San Fernando Valley but all of Los Angeles. There are more than 50% fewer homes for sale compared to a year ago at the same time. In the San Fernando Valley, there are 0.7 months of supply of inventory in the market. That means that in 15-18 days, all of the inventory will be gone if no new homes come on the market. A normal healthy market usually has 4-6 months of inventory. If you are looking to sell, the next few months will be optimal to take advantage of the hot market.
Does it make sense to buy at this time? Yes it does! I predict based on the data, we can expect a 6-10% increase in prices over the 12 months so it is better to but sooner than later and take advantage of the low interest rates.
