Does that mean we’re in a real estate bubble?
Not necessarily. A recent report from real estate tracker CoreLogic noted
that prices across all of Southern California are still 13 percent below
their pre-recession peak, when adjusted for inflation.
The company further predicts that prices in LA County will shoot up a hefty 6.4 percent before the end of the year.
Eric Sussman, adjunct professor of real estate and accounting at UCLA, finds
that prediction “bullish,” but says there’s little reason to believe
prices will bottom out anytime soon.
He says a lack of supply—rather than the risky lending practices that fueled the bubble of a decade ago—is keeping prices high.
“There are just not that many homes on the market,” Sussman says, noting that a
strong rental market may be encouraging some owners to hang on to their
properties.So far, a countywide median sale price well over $500,000
doesn’t seem to be deterring buyers.
“Demand continues to be very high,” says realtor Tracy Do, with Compass. Do says that home shoppers
looking for anything under $1 million should “be prepared for
competition—be prepared for heartbreak.”
She mentions that, even during the holiday season, when buyers tend to be busy with family
events, two of her clients received double digit offers on their
properties.
Richard Haynes, a broker with Manhattan Pacific Realty, tells Curbed that buyer interest in higher-end properties has
begun to cool, but that younger buyers are fueling a particularly hot
market for more affordable properties.
“Lower quartile prices keep rising,” he says. “There’s just too much demand.”
Tom Lind, an agent with Nationwide Real Estate Executives who specializes
in Mid-City real estate, expects the value of area homes to keep
climbing in the coming year.
“A home on the market now may be selling for $50,000 more six months from now,” he says. “The sooner you
can get into the game, the better off you are.”Don’t assume you can’t
afford anything,” he says, noting that clients are often unaware of what
they can buy before sitting down with a lender.
“Once they see what their purchasing power is,” he says, “they’re often pleasantly surprised.”
But that doesn’t necessarily mean first-time buyers should expect to land
the home of their dreams. Lind says they’ll have to be ready to enter
bidding wars and be willing to take on a bit of extra
legwork—researching the market and being prepared to jump at the right
opportunity.
