June 2019 Housing Market Update Los Angeles & South Bay - Median Prices Flatline

Los Angeles real estate broker Mike Weber goes into detail about the Los Angeles housing market and the South Bay real estate market. It looks like we're finally seeing a topping pattern in prices in the Los Angeles County area. The market experienced 0% change in median home prices for Los Angeles County for the month end of May, Y/O/Y. This is in the face of substantially lower Mortgage rates compared to the beginning of the year. Lower rates in the market are no longer acting as stimulus in increasing housing prices, at least, in the Los Angeles area.

 

Normally, median prices peak around May, June, July and gradually fall thru the winter season. The current peak matches the peak of 2018, so it doesn't look like we're going to see much price growth, if any, from here on out. Even if the Federal Reserve lowers the federal funds rate, as I expect they will over the next several months, I do not believe this will create enough stimulus to drive prices higher. Maybe to a marginal extent and for a limited period – but, beyond that, I don't see it working as short term investors and speculators are leaving the market and the economy continues to show signs of weakness across sectors.

 

All this said, we could see a stabilization for some time in the local real estate market. It's possible that these lower rates will add some steam in the multi-family segment, as long term buy and hold investors are able to accept a lower cap rate since the cost of money has fallen, but this will likely taper off, as prices have already offset much of this benefit of slightly lower rates.

 

The Los Angeles and South Bay closed sales remain relatively stable and inventory in both areas continues to grow but not alarmingly. South Bay inventory levels do appear to be making a break-out, so it will be important to watch this throughout the rest of the year to see if this trend stabilizes or continues.

 

Are you thinking of taking advantage of this new softer market to buy a home or an investment property? Is it time for you to sell and make a move or downsize into a smaller home and lock out some of your equity for retirement? If so, give us a call today. We're here to help.