For nearly a decade Los Angeles has been a seller's market. Since the market collapse in 2007 home values have rapidly increased. The fierce competition among buyers has contributed to the rapid property value ascent.
Analysts and real estate agents are already reporting a "leveling-off" trend. The number of overall sales is below the historical average and homes are spending a little bit more time on the market than what we have been accustomed to.
Why 2019 Is The Year For A Housing Market Shift
Many people would point to the millennial buyer pool hitting its peaked, saying that the potential would be buyers have already purchased. However if you look at the average household income for 20-30 years of age you will see that they are priced out of being able to purchase a home.
The speedy increase in home values has out paced wage increases in Los Angeles. This has caused housing affordability to hit a 10 year low, with the cost of a mortgage payment totaling nearly 75% of the median income in Los Angeles. Mortgage rates have been on the rise show no sign of slowing down.
Currently just 17.2% of homes in the Los Angeles metro area are affordable to buyers who earn the median income. The project interest rate hike between 5-5.25% is going to further effect the already small buyer pool.
Buyers With Larger Budgets
Buyers with bigger budgets will see many advantages of this shifting market. This small pool of buyers will force luxury high end sellers to rethink their asking prices if the home is not in top condition. If your home is top condition, it still very much is a sellers market as these homes fetch a premium. If your home needs some work it might be worth investing in touch up or a lower asking price to drive interest to your home and increase the final sales price.
In conclusion, timing the market rarely works out. A home is an investment and the future isn't certain.