The median price of an LA home recently reached a record high of $667,000 — following on from the previous record high of $655,000 set in April. This is the highest median price the entirety of Southern California has ever seen. Nevertheless, the LA real estate market is simultaneously also experiencing the beginnings of slowing demand.
Despite home prices reaching staggering record highs, sales dropped by 2.7% in May across the state. A single-family home stayed on the market for an average of seven days, the first month this year that it failed to drop. “Buyers are getting fed up at this point with submitting as many as eight to 12 offers and getting rejected,” said John Graff, a LA-based broker and CEO of Ashby & Graff Real Estate. “They’re throwing up their hands at this point.” Although properties are still attracting numerous offers, momentum has somewhat slowed. “My clients are exhausted. They would still love to buy a house but they’re not interested in the bidding wars,” noted Kelli Miller, a real estate agent in San Diego. “I’m still seeing multiple offers, but it’s not the frenzy that it was before.”
Impending bubble burst?
Despite sales beginning to slow down, there’s no need to fear an upcoming housing bubble burst. “The lack of inventory is pervasive, and we’re seeing buyer fatigue. The market is still quite intense but not at the same level it was earlier in the year,” said Jonathan Miller, CEO of real estate appraisal firm Miller Samuel. “This doesn’t mean that the next step is a downward trend; it only suggests that the incline won’t be as steep as it was.” Miller isn’t the only expert with this reassuring perspective; John Graff also agrees. “There’s been talk in some corners of a bubble and I want to emphasize that’s not true. It just comes down to supply and demand,” Graff commented.
Boom in luxury property sales
Increasing house prices have in turn led to a rise in home loans. For buyers, a home loan can be a valuable tool that helps make their dream a reality, the Home Loan Expert explains. With or without a home loan, an increasing demand for luxury properties across LA has largely been responsible for the county’s record price highs. In fact, more million dollar homes sold over the past few months than homes valued at under half a million. Agents reveal seeing properties priced under $1 million that would have attracted dozens of offers only just a few months earlier that are now getting as little as five or six offers. Inflated asking prices are mostly to blame.
Overall, the market is still extremely hot. It’s unlikely the slight decline in sales will continue throughout the summer. “This might be a slight cooling as buyers and sellers all take a collective pause to breathe”, comments Graff, “but there’s no sign of this abating any time soon.”
Cassandra Winter is a professional writer and editor. After a career in PR for an arts charity, she now focuses on writing about her favourite topics from public art to restoration and events. When not working she loves swimming, hiking and quiet nights in with her family.