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Los Angeles Real Estate Market Update June 2023

Despite high interest rates, we are still in a extreme seller’s market? Why is this and where is the market heading? Watch this video as Scott Himelstein breaks it down in this Los Angeles Real Estate market update for June of 2023!

July 2023 market update
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To understand the current state of the real estate market, we need to rewind a bit and reflect on what happened in 2022. Last year, interest rates more than doubled, reaching a peak of around 7%. Naturally, this had a significant impact on housing prices. Most neighborhoods in LA County experienced a decrease of approximately 15% in home prices. Such a sharp increase in interest rates was bound to have repercussions.

However, in December, a shift began to occur. Despite the rates remaining relatively high, buyers realized that the market wasn’t going to crash. This led to a surge in demand, resulting in a shortage of available properties for sale.

At the beginning of this year, interest rates briefly dropped to the high fives for a couple of weeks. However, in April and May, they climbed back up to the sevens before the debt ceiling issue in the country was resolved. While the rates have subsided since then, they haven’t decreased as much as anticipated. It’s expected that later this year, as inflation starts to come down, we might see a more significant drop in interest rates.

Now, let’s talk about inventory. Since November of last year, there has been a significant decrease in available properties. Currently, we have nearly 50% less inventory compared to November 2022. This shortage has created a highly competitive seller’s market.

Let’s take a specific example, in the zip code 91326 of Porter Ranch. In November 2022, there were 84 properties on the market. However, from March to May of this year, that number dropped to the mid-thirties. As we move into June, there has been a slight increase in inventory, with the number of properties rising from 38 to 54. Although it’s not a substantial jump, it does provide a bit more choice for buyers. Sellers are recognizing the ongoing seller’s market and are taking advantage of the low inventory by listing their properties.

Now, some of you may be wondering, how are prices still going up despite the high interest rates? Well, let’s consider the rental market. The average median price for a one-bedroom apartment in LA County is currently $2,400 per month. When potential buyers compare this cost with the monthly rent for a house, which can range from four to five thousand dollars, it becomes more appealing to purchase a property instead of renting. This drives up demand for homes, contributing to the increase in prices.

Additionally, homeowners with interest rates below 4% are less likely to sell their properties in the current market. Those who do decide to sell usually have some significant life event motivating their decision. With high demand and limited supply, multiple offers are still common for the majority of listings.

Returning to the zip code 91326 of Porter Ranch, it’s worth noting that of the 54 properties currently for sale, only 19 are listed under $1.5 million. These more affordable properties are attracting a lot of attention from buyers and tend to sell quickly. In fact, recently in Reseda, we had a listing that received double-digit offers and sold for $80,000 over the list price. Open house showings are seeing high attendance, indicating the strong interest in the market.

If you’re a seller, this is still an excellent time to put your property on the market. The low inventory gives you the upper hand, reducing the need for concessions or negotiations that were more common earlier in the year or in 2022.

For those looking to buy a home, there are still opportunities available. Although the market is competitive

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