Signed contracts dip again in LA
It’s all about inventory, inventory, inventory
Amid a consistently hot residential market, a key swath of Los Angeles saw a significant year-over-year drop in signed contracts.
The analysis comes from the most recent report by appraiser Jonathan Miller, with a look at last month’s data compared to January 2021. And it again highlighted what’s been a defining characteristic of California’s supercharged, demand-heavy market.
“Newly signed contracts for single families and condos combined to be overpowered by the lack of new inventory coming online for the second straight month,” Miller said in a statement.
Inventory is the key.
“What we’re seeing is a significant surge in sales combined with a collapse in supply,” Miller said last month, after a fourth quarter report that marked numerous sales records. “The market pace is blistering.”
Last month, according to the new report, Angelenos signed 2,644 new contracts on single family homes in Miller’s L.A. County focus area, which stretches from Downtown to the Westside. That compared to 3,219 signed contracts in January 2021 — nearly an 18 percent drop. New listings fell from 2,096 a year earlier to 1,702, a drop of nearly 19 percent, suggesting the market is only continuing to tighten.
The L.A. County signed contracts fell across nearly all price categories: The number of signings on homes priced between $500,000 and $700,000 fell 38 percent, from 870 to 543, while signings on homes priced between $700,000 and $900,000 fell only slightly, from 678 to 670. Signings on homes between $1 million and $5 million also fell, but signings on homes above $5 million went up, from 51 to 66.
The number of new listings in the county dropped by nearly 19 percent, from 2,096 in January 2021 to 1,702 last month.
Signings were also down on condos priced below $600,000, but signings on condos priced above that threshold were up.
In Orange County, where the pandemic-era market has been even hotter, signings on single family homes dropped from 1,333 a year ago to 852 last month, a decrease of more than 36 percent.
The previous month, in Miller’s December report, signed contracts in L.A. County fell by 17 percent on a year-to-year basis.
Miller and other experts have consistently cited the state’s inventory shortage as a factor in propping up prices as well as a long-term obstacle to the development of more affordable housing. The shortage has grown more acutie amid the pandemic, as demand has soared, driven both by a booming upper half of the economy and historical low interest rates. The trend has shone a light on an increasingly bifurcated economy, bringing a prolonged boom period for the well-heeled in many residential markets, including Southern California, while making it tougher for middle-income households to afford a house.