Another month, another sign of Southern California’s housing crunch, as signed contracts for single family homes in L.A. County fell by nearly 17 percent in December from a year earlier, according to a report published today by the appraiser Jonathan Miller.
“I don’t mean to sound like a broken record,” said Miller, “but this is purely a function of supply remaining inadequate — that supply is just not there.”
Miller’s report measured December signed contracts in a swath of the market from Downtown Los Angeles to the Westside, covering eight price segments. Signings decreased last month in six of those tranches, including 38 percent year-to-year drops in signings for single family homes priced between $300,000 and $500,000 and $500,000 and $700,000. The exceptions were homes priced between $700,000 and $900,00 and $900,000 to $1 million–each of those segments that saw modest increases.
The report counted 2,532 signings overall in December 2021 versus 3,043 signings in December 2020, a 16.8 percent drop. New signed contracts for condos took a tumble, falling from 1,163 to 982, a 15.6 percent dip.
New listings fell even more dramatically — a sign that the region’s housing supply is simply overmatched by demand, said Miller. In December 2021, L.A. County had 1,006 new listings for single family homes, down from 1,320 a year earlier. Condo listings fell from 727 to 378.
That inventory shortage has been a key aspect of California’s constrained housing market for years, as the state continues to suffer from a lack of available homes despite recent efforts to boost supply, including a couple of controversial housing bills signed by Gov, Gavin Newsom.
It’s a trend that has also helped fuel record high prices in the state — and it’s likely to remain in place in 2022.
“It definitely is a challenge,” said Miller, “and it’s just that inventory can’t be organically created fast enough.”
Soaring home prices led many homeowners to sell in recent years, helping prop up inventory, but that pool of possible sellers may have been exhausted.
“For many, now it’s money on paper, because they’re holding back listing until they feel comfortable they can find something to buy,” Miller said, “so they don’t list, and it just doubles down on the problem.”
In November, signed contracts in L.A. County rose by eight percent compared to a year earlier, an uptick that indicated the market was stabilizing more than a year removed from the peak of the pandemic-driven buying frenzy. Before then, year-over-year contract signings had declined every month since June.
The December report indicates that constrained supply could take over where the pandemic-driven demand leaves off in the year ahead.