Federal interest rates may be rising, but L.A.’s residential market is still hot and inventory is still dramatically low — and contract signings are still suppressed.
New signings on single family homes dipped yet again in a key swarth of L.A., dropping 16 percent year-over-year last month, according to a report published this week by Jonathan Miller of appraisal firm Miller Samuel. It was the fourth consecutive month of year-over-year decreases for the report’s focus area, which stretches from Downtown to the Westside.
L.A. saw 3,640 new signed contracts in March, down from 4,308 a year earlier.
“The story generally is that new listings entering the market continue to be anemic,” Miller said a month ago, upon the release of the February report. “The challenge of this market continues to be that inventory is simply not available.”
That dearth of inventory is the product both of California’s chronic housing shortage and a pandemic-era market characterized by months of feverish demand.
It was also evident again in this week’s report: In March, the swath of L.A. County included by Miller saw 2,131 new listings — down 11 percent compared to a year earlier.
In a more historical context, however, the region’s market is still relatively active: Miller notes in the report that the March signed contracts figure was still higher than pre-pandemic figures, before demand for housing soared. Last month’s signed contracts figure was also slightly higher than the February tally.
Compared to a year prior, signings in March fell sharpest at both the highest and lowest ends of the market, suggesting a further lack of inventory at these price points.
The county saw a 25 percent drop in new contracts for homes priced above $5 million, and decreases of over 40 percent on signings for homes priced below $700,000. The number of signings on homes priced between $700,000 and $900,000 fell slightly, while the figure for signed contracts on homes priced between $1 million and $2 million rose 7 percent.
L.A. County’s condo market was particularly constrained, with a 33 percent year-over-year drop in new listings and a 20 percent drop in new signings. Orange County — among the country’s hottest housing markets — saw a 22 percent increase in new listings, but a 30 percent decrease in signed contracts.
A climate of rising interest rates “takes the edge off” soaring housing demand, Miller said last month, but was unlikely to dramatically alter Southern California’s hot market.