While what is called buying season traditionally begins in spring across the country, it always starts a little early in Southern California where we don’t have to worry about the weather. This year, however, the season kicked off earlier than usual, leading us to have our busiest January ever.
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While we have seen some slowing at the high end of the market, most of the real estate market in Los Angeles is highly active and highly competitive. Recently Freddie Mac predicted that 2016 could be the best year for the real estate market during this decade. Sales, housing starts, and housing prices are all expected to rise, reaching their highest point since 2006. Mortgage rates are expected to remain low throughout the year and continued job growth may ease the afford ability crunch. The Fed has indicated that there will likely be two modest hikes in the interest rate in 2016 as inflation rises and the economic fundamentals remain solid, the Fed has not indicated yet when this year’s first hike will take place.
The biggest challenge that the real estate industry continues to face is low inventory. According to the California Association of Realtors®, the statewide inventory level hovers under the five-month mark (six months supply is the historical average). Partners Trust Associates continue to see strong competition for entry-level and move-up homes with multiple offers common. There is some slowing at the high-end of the market as homes over $6 million linger on the market. In the Bel Air/Holmby Hills area for example, sales were down -46.67% and prices fell -22.21%.
Neighborhoods where prices have continued to strongly increase include Los Feliz, where the average sold price is now $2,019,572, up 34.54%; Santa Monica where the average sold price is now $3,291,342 up 26.69%, year over year; the Beverly Hills Post Office area where the average sold price clocked in at $3,453,303, up 40.49%. Please note these numbers are somewhat inflated when comparing sales over a three month period. For example, more higher-end home sales may have sold in that particular time frame compared to last year. Comparing sales over a full calendar year provides the best perspective but these numbers provide a good indication of what is currently going on with the market.
Please visit our Market Stats section for this latest report.