Los Angeles has become a topsy-turvy home market in terms of pricing.
Redfin noted that L.A. County home prices declined 6.3 percent in March compared to the same month the previous year. It follows a national trend which found home prices have dropped 3 percent, which Redfin called the biggest price drop in a decade.
However, in a month-to-month comparison, Redfin found L.A. County home prices climbed 3.1 percent to a median price of $820,000 in March, compared to a median price of $795,000 in February.
Another measurement of home prices found the same pattern — namely, a price decline over the past year, but a sudden uptick with the spring buying season. The Case-Shiller Home Price Index also showed a year-to-year decline in prices in Los Angeles, down 1.27 percent in February 2023 compared to the same time in the previous year. However, there was an uptick of 0.64 percent comparing February to January.
While higher mortgage interest rates present a headwind to home prices, Zillow sees low inventory as a factor supporting prices.
“A reversal from negative monthly growth to positive monthly growth shows signs that the normality of the spring home shopping season is returning,” said Nicole Bachaud, a Zillow senior economist. “Inventory has remained low as sellers are locked into their low mortgage rates, even as many home buyers are turned away from this market due to affordability constraints amid volatile mortgage rates.”
Los Angeles’ most popular neighborhoods have been long known for low housing inventory and high buyer demand. As a result, many agents working on the ground in L.A. haven’t noticed a meaningful shift in the market.
“Prices have held steady for the most part — it’s because of lower inventory and consistent demand in prime neighborhoods,” said Ernie Carswell, founder of Carswell & Associates at Douglas Elliman, who ranked on TRD’s top residential brokers of 2022.
Declines in housing prices have spelled trouble for the market in the past, said Dana Potter, chief executive officer of Pinnacle Estate Properties, which was ranked by TRD among the largest Los Angeles brokerages by headcount in 2022. In the slow markets of the mid-1990s and after the meltdown of the Great Recession, prices declined and many homeowners found themselves underwater, but that’s not the case in the current market.
“We’re not seeing foreclosures and short sales,” Potter said. “Today, people are equity rich. We still have a lot of buyers. But there’s not enough homes coming onto the market.”
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