The real estate industry in Los Angeles faces some economic uncertainty as home prices are rising and putting a damper on projected home sales over the next year. However, the low mortgage rates may be exactly what is needed to offset this. The projected outlook is showing home sales to be flatter and is only seeing an increase of approximately 0.8 percent, which is more than the previous year but around 2 percent less than 2018 and a staggering 7 percent less than 2017. It’s good to note that this is a prediction based on the larger Los Angeles area, while the market in the area you are selling or looking to purchase in will have specific market conditions.
Rising Home Prices
According to forecasts, home prices will continue to rise as a single-family home in California will average around $607,900. With these projections, the median home price for a family home will be up approximately 2.5 percent from the earlier projections. So, while there may not be an improvement in the affordability of homes in Los Angeles, the lower mortgage rates are helping a little and providing more incentive to buy.
Low Ownership and Steady Rentals
With prices steadily rising, these fluctuations are making predictions much harder. Some feel that there will be a mild recession in 2020 that will result in a housing price drop while others feel the prices will remain moderate. These lower affordability rates, on the other hand, are driving an even stronger rental market in LA. So, a downward trend in homeownership is being shown up by a demand for rental properties and could be interesting if you are looking to purchase an investment property. This demand is likely to increase the average rental prices in the area, as well.
New Housing Construction
There has also been an increase in the construction of multifamily and single-family homes. Market predictions for the Los Angeles real estate market are saying that there will be a definite rise in construction with more than 9,000 new homes being built over the next year.
While the sales volume may be lower in the next year, the buyers’ market is reflecting lower competition and lower demand for Los Angeles homes. This is expected to change in 2021, however, because it is predicted that the seller’s market will pick up again.
If you are looking to invest in real estate in the Los Angeles area, then it is important to stay on top of these predictions, and we are happy to address any questions you may have.
You also need to consider the different neighborhoods in LA because they each will perform very differently when it comes to homes for sale and rental property investments. So, when looking for real estate in LA, you want to make sure to take advantage of an area in 2020 that allows for the highest possible return rate.