The competitive housing market in the United States continues to be a major obstacle for people looking to buy a home. In many places, homes are put on the market and within days they are sold for thousands of dollars above the asking price.
Perhaps nowhere has this problem been seemingly more prevalent than in the greater Los Angeles area. Demand for homes has skyrocketed during the COVID-19 pandemic, and sometimes it feels like it has continued into 2022.
But new research released by real estate giant RE/MAX shows that the total number of homes sold has dropped drastically over the past year compared to the year before, and homes that are on the market are staying longer. .
The study shows that nearly 25% fewer homes were sold in Los Angeles from May 2021 to May 2022, compared to the same period the previous year.
This 24.4% year-over-year decline in the number of homes sold is the largest decline among any metropolitan area in the country, according to the study.
May is one of the busiest months for home buyers according to RE/MAX, but despite this, the country as a whole has seen an 8.5% drop in the number of homes sold this year compared to last May. .
The reason for the drop in sales? This is likely due to rising inventories and rising mortgage interest rates.
James Sanders is a broker and owner of RE/MAX Estate Properties in Los Angeles. He says the appreciation spree in the housing market was “not sustainable” and says he expects the market to stabilize further.
“Rising interest rates have brought the LA real estate market back to a more typical real estate market,” Sanders said. “We have seen a drop in demand of 10 to 15%. Our inventory is up 36% over last year, but remains more than 75% below our typical pre-pandemic levels. »
Sanders said homes are staying on the market longer, most for 40 days or more. At the peak of the “frenzied market,” homes were seized in about 25 days. Sanders also said Homes are seeing a handful of offers on competitively priced homes, compared to the dozen offers made on each property in the recent year and beyond.
But don’t expect prices to fall because fewer homes are being sold and demand seems to have cooled. According to RE/MAX, homes sold in Los Angeles over the past year have sold for 3.3% above asking price. This represents an increase of 3.8 percentage points from 2021, when homes sold for 99.6% of the asking price.
“We don’t see prices correcting like they did during the Great Recession,” Sanders said. “Homeowners have too much equity in their properties and as a result we don’t see a big struggling sales market.”
This is true across the country. The median sale price of a home sold in the United States increased by approximately $50,000 from May 2021 to May 2022.
So fewer homes are sold, fewer offers are made, and homes stay on the market longer. But prices continue to rise despite these factors, at least for now.
“Even with interest rates hovering around 6%, they’re still historically low, and real estate in Los Angeles has always been a great investment,” Sanders said.
The decline in home sales is not limited to Los Angeles. Just south of San Diego, home sales fell 20.4% over the same period.
Below are the top five markets that saw the biggest decline in year-over-year home sales from May 2021 to May 2022.
|5 markets with the largest year-over-year decline|
|Year after year
% To change
|Los Angeles, CA||7,553||9,991||-24.4%|
|San Diego, California||2,858||3,591||-20.4%|
|Trenton, New Jersey||332||410||-19.0%|
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