Year over year sales for condos and townhomes (legally defined as condos) in the Los Angeles metro area fell 24% from December of 2017 to December of 2018. We expect SFR sales volume to be very similar. While 2018 launched with high sales figures and the accompanying bidding wars, the year tapered off quickly after the third Fed interest rate increase in September. The fourth Fed rate increase in late December threatened to be the death knell for mortgage loans, however lenders almost universally ignored the Federal attempt to slow inflation and kept rates down in the mid to high 4% range.
The number of transactions went negative, but prices managed to stay on the upward trend, albeit just barely. Some forecasters were still talking about 10% overall price increases. Actuals show only 1.8% increase, year over year.
It looks like the “handwriting is on the wall,” so to speak. The real estate market has reached the apex of the current price run-up and started the downward slide. At ten years, it was an exceptionally long economic recovery from the 2008 economic collapse. In a number of respects the nation is still experiencing the fallout. In many parts of the country, homes prices continue to lag behind the high points of the last boom period. Even in places that have recovered, like LA, individuals are still fighting to get back what they lost.
Pundits have yet to settle on a uniform picture of what 2019 is going to look like in a real estate sense. In the face of the many drama-filled events surrounding the United States, we here are expecting a relatively rapid drop in both, sales and prices. Technology has brought the speed of light to the communication channels buyers and sellers use. Thus, when a panic starts, it spreads almost instantly.
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For more details, see https://la.curbed.com/2019/1/23/18194592/los-angeles-condos-for-sale-market.